Lawyer in Vietnam Oliver Massmann PUBLIC MERGERS AND ACQUISITIONS IN VIETNAM: MARKET ANALYSIS OVERVIEW

1. Lawyer in Vietnam Oliver Massmann PUBLIC MERGERS AND ACQUISITIONS IN
VIETNAM: MARKET ANALYSIS OVERVIEW
Largest / most noteworthy public M&A transactions in the past 12 months
IT and electronic equipment
In June 2014, Vietnam's leading IT corporation, FPT Software, acquired RWE IT Slovakia, a
subsidiary of the RWE Group (one of Europe's leading utility companies). Therefore, RWE IT
Slovakia will be 100% owned by FPT Software and be renamed FPT Slovakia. This deal is also
the first M&A transaction of FPT and first M&A deal by a Vietnam ICT company outside
Vietnam. However, the deal value has not been disclosed.
Oil gas and chemicals
In November 2014, SapuraKencana Petroleum Berhad (Malaysia) acquired the entire interest of
Malaysia's national oil company Petroliam Nasional Berhad (Petronas) in three blocks offshore
from southern Vietnam for US$400 million after an international bidding process.
Financial
Noteworthy public M&A transactions include the following:
 In December 2014, Vietnam National Financial Switching JSC (Banknetvn) merged with
Smartlink Card JSC (Smartlink). Banknetvn then became the only card switching company on
the market in which the central bank holds 25% of the total shares.
 In May 2015, Sai Gon Thuong Tin Commercial Joint Stock Bank (more commonly
known as Sacombank) merged with Southern Commercial Joint Stock Bank. Following the
merger, Southern Bank shareholders obtained a 0.75 Sacombank share for each share they held.
The merged entity, to be called Sacombank, will have a charter capital of more than VND18.85
trillion (US$856 million) and total assets of over VND290.86 trillion (US$13.2 billion).
Sacombank's shareholders agreed to the merger by a 93.7% vote.
 In May 2015, the merger between the Mekong Housing Bank and the Bank for
Investment and Development of Vietnam was completed.
 In April 2015, Credit Saison spent about JPY5 billion to take a 49% stake in HDFinance,
Vietnam's third largest consumer finance business.
 In August 2015, the Mekong Development Bank (MDB) was set to merge with the
Vietnam Maritime Commercial Bank (Maritime Bank) to form an institution that would be
among the country's five largest banks in terms of charter capital. Currently, Maritime Bank's
charter capital is US$373.8 million and MDB's is US$175.23 million, meaning that the new

2. banking institution would have a charter capital of US$549 million and total assets of US$5.28
billion.
 The Vietnam Bank for Industry and Trade (Vietinbank) will merge with Petrolimex
Group Commercial Joint Stock Bank (PG Bank). The change rate for PG Bank shares to
Vietinbank shares is 1:0.9, which means Vietinbank will exchange 270 million of its shares for
300 million of PG Bank shares. The merger will increase Vietinbank's total assets by VND25
trillion (US$1.19 billion) to VND685 trillion (US$31.7 billion), and its chartered capital by
VND3 trillion (US$142.86 million) to more than VND40 trillion (US$1.85 billion).
Mining, metals and engineering
In 2014, Vietnam Coal and Minerals Group (Vinacomin) sold 100% of its charter capital in
Vietnam Coal - Mineral Single Member Financial Limited Company to Vietnam Prosperity Bank
(VP Bank). The deal value has not been disclosed.
Pharmaceuticals, biotechnology and healthcare
In September 2014, Standard Chartered Private Equity successfully acquired a significant
minority stake in An Giang Plant Protection JSC, a market leader in the Vietnam agricultural
sector for US$90 million.
Other
Retail. Noteworthy public M&A deals include the following:
 In August 2014, Thailand's Berli Jucker Public Company Limited (BJC) bought Metro
Cash & Carry Vietnam in a deal valued at EUR655 million.
 Thailand's Central Group completed the acquisition of 49% of the total shares in NKT
New Technology and Solution Investment and Development Corporation, the owner of Nguyen
Kim Trading Company. The deal value has not been disclosed.
 Vingroup bought 70% of the total shares in Ocean Retail Company, a member of Ocean
Group that owns the OceanMart retail system in northern Vietnam, and renamed it VinMart
Retail Group. The deal value is US$26 million.
Food. Noteworthy deals include the following:
 In April 2015, Masan Group announced the acquisition of stakes in two companies. It
acquired 52% of the total shares in Vietnam French Cattle Feed JSC (Proconco) and 70% of the
total shares in Agro Nutrition Company JSC (Anco). The acquisition occurred when the group
bought 99.99% of the total shares in Sam Kim Limited Liability Company and renamed it Masan
Nutri-Science Company.

3.  In May 2015, Filipino firm Pilmico Foods Corporation acquired some feed companies in
Vietnam in an expansion bid. Pilmico, a subsidiary of the Aboitiz Group, had bought 70% of the
total shares in Vinh Hoan 1 Feed JSC (VHF) at US$28 million in 2014.
 F&N Dairy Investments Pte Ltd holds 110.4 million shares of Vietnam Dairy Products
Joint Stock Company (Vinamilk), equivalent to 11.04% of its charter capital. It is now the
second largest shareholder of Vinamilk after the State Capital Investment Corporation (SCIC).
 Mondelēz International completed the acquisition of 80% of the total shares in Kinh Do
Corporation, a popular snack business in Vietnam, for about US$370 million
Real estate. Noteworthy deals include the following:
 In January 2014, the Hong Kong-based Tung Shing Group acquired 53% of the total
shares in Mövenpick Saigon Hotel in Phu Nhuan District, for approximately US$16 million.
 In March 2015, Lotte Group acquired 70% of the Diamond Plaza project. The building
had benefited from an initial investment of about US$60 million. However, Lotte Group did not
reveal the amount of money spent on the deal.
 In November 2014, Ho Chi Minh City-based property company, Novaland Joint Stock
Company, bought some stalled projects, including Icon 56 and Galaxy 9 in District 4 and
Lexington Residence in District 2, which had benefited from investments of about VND3 trillion
(US$142.5 million).
 In June 2015, Gaw Capital Partners (GCP), the Hong Kong-based private equity firm,
acquired an existing portfolio of real estate projects in Vietnam. The portfolio was purchased for
US$106 million and is comprised of four of the remaining projects originally held under
Indochina Land Holdings 2 Ltd.
 In early July 2015, Gamuda Land Vietnam, a division of Malaysian property developer
Gamuda Berhad acquired Celadon City from the Saigon Thuong Tin Real Estate JSC
(Sacomreal) and the Thanh Thanh Cong JSC (TTC) for an estimated VND1.4 trillion (US$64.1
million). The estimated original investment is VND24.8 trillion (US$1.1 billion).
 In 2015, Vingroup has become a dominant local M&A acquirer with a long list of
transactions in the real estate, retail and logistics sectors. Its most notable additions include:
o Masteri Thao Dien for US$75 million;
o 30% stake ownership in Vinatex for US$26 million;
o 90% stake ownership in Giang Vo Trade Show Center for US$69 million; and
o 30% stake ownership in Hop Nhat Express for US$52 million.
 In November 2014, the US-based Global Emerging Markets Fund (GEM) agreed to
acquire 10% of Hoang Anh Gia Lai, a Vietnamese plantation and real estate company, for

4. US$80 million. GEM will obtain a board seat and will support the company potential listing on
the international markets in the future.
Insurance. In April 2015, Canada-headquartered Fairfax Financial Holdings, through its
subsidiary Fairfax Asia Limited, acquired about 35% of the total shares of the Bank for
Investment and Development of Vietnam Insurance Joint Stock Corporation for US$50 million,
therefore becoming a strategic investor in the firm.
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).
 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 certificate. This change will hopefully end years of uncertainty and frustration faced
by foreign investors seeking entry into the Vietnam market or expansion through M&A
transactions. However, it is still early to assess the effectiveness of these laws, as they have only
been implemented since July 2015, and their guiding documents have not been issued yet. This
has left enterprise registration and licence amendments in limbo, particularly for enterprises that
have obtained licences under the former Enterprise Law and Investment Law. This situation has
a direct impact on 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

5. 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.
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.
Another factor is the government's target to equitise state-owned enterprises (SoEs). The Prime
Minister approved the plan to turn 432 SoEs into joint stock companies in the 2014-2015 period.
To date, 176 of such companies have been equitised. Initial public offerings by major SoEs have
been creating new, attractive supplies to the M&A market. The restructuring of commercial
banks and divestments from non-core business by SoEs have made the M&A market more
attractive.
Encouraging signs for foreign investment include:
 Economic recovery.
 Reformed policies to allow wider access to foreign investors.
 The conclusion of free trade agreements (FTAs) and the Trans-Pacific Partnership (TPP).
 The bouncing back of the stock market.
 New regulations that increase the authorised levels of foreign investment in public listed
companies.
The introduction of the new Investment Law, Enterprise Law 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.

6.  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.
 Growing Japanese investment in Vietnam through M&A transactions.
 Reform of SoEs.
The derivatives market is expected to open in 2016, which will help in preventing risks, boosting
the growth of the stock market and in promoting M&A deals.
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Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you
have any questions or want to know more details on the above. Oliver Massmann is the General
Director of Duane Morris Vietnam LLC.