Lawyer in Vietnam Dr. Oliver Massmann Public Mergers and Acquisitions : Market Analysis Overview

1. Lawyer in Vietnam Dr. Oliver Massmann Public Mergers and Acquisitions:
market analysis overview 2018
Largest / most noteworthy public M&A transactions in the past 12 months
Oil gas and chemicals
In May 2017, Earth Chemical bought 100% stake in A My Gia Joint Stock Company at about
USD79.2 million.
Financial
In July 2017, Vietnam International Joint Stock Commercial Bank bought 100% business of
Commonwealth Bank of Australia (Ho Chi Minh Branch).
In December 2017, Shinhan Bank Vietnam Ltd. (“Shinhan Bank Vietnam”) acquired ANZ Bank
(Vietnam) Limited’s retail business. This successful transaction has been considered as a big step
for Shinhan Bank Vietnam’s development in Vietnam market, as well as a rapid growth for
Vietnam retail banking in the upcoming time.
Other
Retail. Noteworthy public M&A deals include the following:
 In January 2018, Creador (a private Kula Lumpur-based investment fund) bought 35%
shares of Mobile World Investment JSC at USD43 million.
 ThaiBev buying more than 53% shares in Sabeco – a company owned by the Ministry of
Industry and Trade at USD 5 billion.
 In November 2017, JD.com bought shares in Tiki JSC at USD 44 million.
 In June 2017, Alibaba Group additionally bought shares of Lazada at USD1 billion, thus
increasing its shares in Lazada to 83%.
 In July 2017, Sea Limited (Singapore) bought 82% shares of Foody Corporatio at USD64
million.
 In April 2017, Shinhan Vietnam Bank bought the retail business of ANZ at an
undisclosed value.
 In May 2017, Bien Hoa Sugar Company and Thanh Thanh Cong Tay Ninh Sugar
Company bought 100% charter capital of HAGL Sugar at about USD58.52 million.
 Synnex Technology International bought 30% shares of FPT Retail and 47% shares of
FPT Trading from FPT Corporation at around USD 41 million.
Food. Noteworthy deals include the following:

2.  In mid- November 2017, Jardine Cycle & Carriage Limited (JC&C), via Platinum
Victory Pte. Ltd bought 5.53% shares of Vinamilk at USD616.6 million.
 In late March 2017, CJ Cheiljedang Corporation bought 20% stake in Saigon Trading
Corporation at USD8.2 million, bringing its total ownership in Cau Tre Export Products
Processing Joint Stock Company to 71.6%.
 In May 2017, Kido Corporation bought 27% stake in Vietnam Vegetable Oil Industry
Corporation, bringing its total ownership in the company to 51%.
Real estate. Noteworthy deals include the following:
 Warburg Pincus in joint venture with VinaCapital bought 50% shares in Sofitel Legend
Metropole Hanoi at about USD100 million.
 Warburg also established a joint venture with Becamex Industrial Development
Corporation to invest in industrial real estate and logistics services with a capital of
USD200 million.
 In May 2017, Elite Capital Resources Limited bought 100% shares of VinaLand Fund
(VinaCapital) in Thang Long Limited Company (project owner of Times Square Hanoi)
at USD41 million.
 In the first quarter of 2017, Sulyna Hospitality bought 70% stake in a 4-start resort in Phu
Quoc from Berjaya Land at USD14.65 million.
 In the first quarter of 2017, An Gia Investment Corporation and its partner Creed Group
bought 5 apartment blocks of La Casa Project of Van Phat Hung Corporation at about
USD40 million.
 In March 2017, Keppel Corporation increased its shares in Saigon Centre project ato 16%
at USD37 million.
 In January 2017, CapitaLand announced the purchase of 90% stake in CapitaLand Thanh
Nien.
 Shinhan cooperated with Vinacapital to invest USD100 million in Novaland
Insurance. Noteworthy deals include the following:
 In April 2017, Aviva Insurance Corporation bought 50% stake of VietinBank Aviva Joint
Venture Company from Vietnam Joint Stock Commercial Bank for Industry and Trade.
The major trends in the structuring of public M&A transactions
In Vietnam, M&A transactions usually take the form of either share or asset acquisitions, with
share acquisition transactions outnumbering asset acquisition transactions.
Share acquisitions by foreign purchasers are commonly structured as offshore direct investments.
The new investor can:
 Acquire shares or capital contributions from an existing shareholder in the target (for
example, a joint stock company, limited liability company, and so on).
 Subscribe for newly issued shares of the target (for a joint stock company).

3.  Make further capital contributions to the target (for a limited liability company).
In the case of an asset deal, a foreign purchaser must generally establish a new subsidiary in
Vietnam.
In addition, M&A transactions can also take the form of a merger. One or more companies of the
same type can be merged into another company by transferring all assets, rights, obligations and
interests to the merged company, terminating the existence of the merging company.
The 2014 Enterprise Law sets out the types of business structuring that can be used by investors
as a result of M&A transactions. In addition, the 2014 Investment Law is the first law that
regulates M&A transactions and clearly provides that such transactions do not require an
investment registration certificate. Now, the foreign investors must seek approval from the local
Department of Planning and Investment of the transaction if the:
 Target company operates in conditional business sectors applicable for foreign investors.
 Investment leading to foreign ownership of the target company is 51% or more (in
particular, from below 51% to more than 51% and from 51% to above 51%).
In other cases, the target company only needs to register a change of membership/shareholding at
the Business Registration Division. This change has ended years of uncertainty and frustration
faced by foreign investors seeking entry into the Vietnam market or expansion through M&A
transactions.
The level/extent of private equity-backed bids in the past 12 months
Investment in the form of M&A transactions is still the most popular form compared with private
equity investment. In recent months, private equity funds have been following the securities market
in Vietnam, especially companies carrying out value chain operations. Consumer goods and
infrastructure are the sectors that attract the most attention. However, due to limited publicly
available information, it is not possible to fully assess the level of private equity-backed bids.
The approach of the competition regulator(s) in the past 12 months
The Vietnam Competition Authority under the Ministry of Industry and Trade (VCA) must be
notified of the transaction if participating companies have a combined market share in the relevant
market of 30% up to 50%. The VCA will then examine whether the calculation of the combined
market share is correct and whether the transaction is prohibited (that is, whether the combined
market share exceeds 50%, except in certain cases). The transaction can be conducted when the
VCA issues a written confirmation that the transaction is not prohibited under competition law.
In recent Grab buying Uber case in South East Asia, the VCA has started its investigation of
possible violation of Vietnam’s Competition Law. The case is still at the examination stage.
For more information on the VCA, see www.vca.gov.vn/Default.aspx?lg=2.
Main factors affecting the public M&A market over the next 12 months
The country's deeper and wider integration into the world's economy is offering new opportunities
for M&A activities.

4. Another factor includes the high pressure faced by the government to privatise state-owned
enterprises to meet requirements under signed trade pacts, especially the EU – Vietnam Free
Trade Agreement, which is expected to come into force in 2019.
Encouraging signs for foreign investment include:
 Reformed policies to allow wider access to foreign investors.
 ASEAN Economic Community single market and production base.
 The conclusion of free trade agreements (FTAs), including the EU – Vietnam FTA and
The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
 Vietnam’s super rich population is growing faster than anywhere else and is on track to
continue leading the growth in the next decade.
 Equitization of state-owned enterprises will speed up.
The introduction of the new Investment Law, Enterprise Law, Resolution No. 42 on handling
bad debts and other laws and policies are creating an improved legal environment for investment
and trade in general, and the M&A market in particular. However, the following factors also
affect M&A transactions:
 Divergent interpretations and implementations by local licensing authorities of
international treaties such as Vietnam's WTO Commitments.
 Different licensing procedures applied to different types of transactions (for example, for
foreign invested companies and domestic companies, public companies and private
companies, and for buying state-owned shares or private shares).
Although legal and governance barriers, along with macro instability and the lack of market
transparency are still the greatest concerns for investors, M&A deals in Vietnam are still
expected to be one of the key, effective channels for market entry.
The major expected trends in the Vietnam M&A market include:
 Bank restructurings.
 Acquisitions and anti-acquisitions, particularly in the real estate sector.
 Growing Japanese and Thai investment in Vietnam through M&A transactions.
 Reform of SoEs.
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Please do contact the author Dr. Oliver Massmann under omassmann@duanemorris.com if you
have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris
Vietnam.