Watchdog gives nod to Mobile World-Tran Anh M&A

Mobile World is planning to acquire 100% stake in Tran Anh Digital World to form an economic concentration activity under the management of the competition authority.

The tie-up between the two companies will have an impact on the structure of the retail market for electronic and IT products as they are the two largest retailers, with Tran Anh Digital owning 39 electronic outlets in the north and Mobile World having over 1,500 stores nationwide.

The tie-up between Mobile World and Tran Anh Digital will have an impact on the structure of the retail market for electronic and IT products (Photo vnreview.vn)

Mobile World has three major brands - The Gioi Di Dong, Dien May Xanh and Bach Hoa Xanh.

Following the takeover, Tran Anh Digital will become a subsidiary of Mobile World, and they are expected to exercise a bigger market power after the acquisition.

After appraising the acquisition document and collecting opinions of similar businesses in the market, the Competition and Consumer Protection Department said the increase in their market power is not significant as the market share of Mobile World before and after the acquisition is defined at over 30% for IT products, still being the dominant business in the sector.

“Based on the combined market share of the relevant market, the economic concentration between Mobile World and Anh Digital in the form of a business acquisition is not prohibited under Article 18 of the Competition Law,” the department said in a message on Monday.

According to Article 18 of the 2004 Competition Law, an economic concentration is prohibited if the combined market share of the enterprises participating in this activity is more than 50% in the relevant market, except in case of an “exemption".

The department said it will continue to oversee the competitive activities of Mobile World in the retail market for household electronic devices and IT products to timely detect any abuse of its dominant position in accordance with the Competition Law.

At the shareholders’ meeting on August 28, Mobile World’s shareholders agreed with the company’s plan of putting aside VND2.5 trillion (US$110 million) for M&A activities, targeting electronics and pharmaceutical retailing businesses.

Detailed information of the M&A between Mobile World and Tran Anh Digital, such as value or share swap ratio, is yet to be released. However, in late September, two senior executives of Mobile World joined Tran Anh Digital’s managing board.

On December 11, Mobile World said its board of managers approved the plan of issuing 6.7 million shares, equivalent to 2.18% of its outstanding shares, to fewer than 10 investors in a private placement.

The shares, expected before the year-end, are being offered at a minimum price of VND90,000 per share and maximum price of VND110,000.

The new share issue is speculated to be designed to sell to Tran Anh Digital’s senior stakeholders.

In addition, Mobile World will issue over 9.22 million shares in an employee stock ownership plan to its employees, which will have restricted transferring for four years.

Shares of Mobile World (code MWG on the HCM Stock Exchange) were traded at some VND128,000 per share, while Tran Anh Digital’s shares were valued at VND33,000 per share on December 11.