Thanh Thanh Cong Tay Ninh Joint Stock Company (Photo: nhadautu.vn)Hanoi (VNS/VNA) - Thanh ThanhCong Tay Ninh Joint Stock Company (TTCS) will fully acquire Bien Hoa SugarJoint Stock Company (JSC), becoming the biggest sugar producer in Vietnam.
TTCS will issue nearly 304 million shares in a stock swap to acquire alloutstanding shares of Bien Hoa Sugar at a ratio of 1:1.02.
The conversion ratio was calculated by a third-party company that valued theshares of TTCS and Bien Hoa Sugar at 20,944 VND (0.92 USD) and 21,356 VND (0.94USD), respectively. The deal will be carried out within 90 days.
After the merger is completed, the chartered capital of TTCS will increase by3.04 trillion VND (133.75 million USD) to 5.57 trillion VND (245.07 million USD).The new company will be renamed Thanh Thanh Cong Bien Hoa-Dong Nai Sugar Co.,Ltd.
The combined turnover of the companies last year was 8 trillion VND (353.42million USD) with its capital of 10 trillion VND (440.53 million USD).
Thanh Thanh Cong is one of several major companies to invest in theagricultural sector through mergers and acquisitions (M&A).
In recent years, though M&A activities in agriculture have admittedly notbeen as frequent as in other sectors, the agricultural sector too has seen a significantincrease in the number of successful M&A deals, and several major investorslike Vingroup, Truong Hai, PAN, and Unifarm have been involved.
They have benefited in the form of trillions of VND worth of turnover.
After the merger is completed, the chartered capital of TTCS will increase by3.04 trillion VND (133.75 million USD) to 5.57 trillion VND (245.07 million USD).The new company will be renamed Thanh Thanh Cong Bien Hoa-Dong Nai Sugar Co.,Ltd.
The combined turnover of the companies last year was 8 trillion VND (353.42million USD) with its capital of 10 trillion VND (440.53 million USD).
Thanh Thanh Cong is one of several major companies to invest in theagricultural sector through mergers and acquisitions (M&A).
In recent years, though M&A activities in agriculture have admittedly notbeen as frequent as in other sectors, the agricultural sector too has seen a significantincrease in the number of successful M&A deals, and several major investorslike Vingroup, Truong Hai, PAN, and Unifarm have been involved.
They have benefited in the form of trillions of VND worth of turnover.
VinEco, a member company of Vingroup, the leading estate developer in Vietnam hasinvested around 4 trillion VND in agriculture, generating revenues of 354billion VND last year and an estimated 2.25 trillion VND this year.
The Fresh Vegetables and Fruits Production and Supply Joint Stock Company, asubsidiary of TH Corporation, has announced plans to inject 35 million USD todevelop 3,000 hectares of vegetables and fruits in the northern province of ThaiBinh and 180 hectares in the north-central province of Nghe An.
Masan Nutri-Science owns 75.15 percent of Vietnamese-French-owned Cattle FeedJSC (Proconco) and 99 percent of InternationalAgriculture Nutrition JSC (Anco), which added 24.42 trillion VNDto the company’s turnover and 1.54 trillion VND to its net profit last year.
PAN Farm owns a 75 percent stake in the Vietnam National Seed Joint Stock Company(Vinaseed) and a 63.8 percent stake in PAN Saladbowl.
Those companies, all of which have strong resources and ambitious andmethodical strategies, are expected to help improve the quality as well asproductivity of the agriculture sector, thus creating more opportunities forM&A deals.
Analysts have come up with many reasons to explain giant companies’ greatinterest in M&A deals in the agricultural sector.
The Fresh Vegetables and Fruits Production and Supply Joint Stock Company, asubsidiary of TH Corporation, has announced plans to inject 35 million USD todevelop 3,000 hectares of vegetables and fruits in the northern province of ThaiBinh and 180 hectares in the north-central province of Nghe An.
Masan Nutri-Science owns 75.15 percent of Vietnamese-French-owned Cattle FeedJSC (Proconco) and 99 percent of InternationalAgriculture Nutrition JSC (Anco), which added 24.42 trillion VNDto the company’s turnover and 1.54 trillion VND to its net profit last year.
PAN Farm owns a 75 percent stake in the Vietnam National Seed Joint Stock Company(Vinaseed) and a 63.8 percent stake in PAN Saladbowl.
Those companies, all of which have strong resources and ambitious andmethodical strategies, are expected to help improve the quality as well asproductivity of the agriculture sector, thus creating more opportunities forM&A deals.
Analysts have come up with many reasons to explain giant companies’ greatinterest in M&A deals in the agricultural sector.
Many of the Government’s recent policies are aimed at developing theagricultural sector with high quality and productivity.
Notable among those is a resolution to provide credit worth 100 trillion VND(4.4 billion USD) at lower than market interest rates to develop high-tech agriculture.
It stipulates that banks must cut costs so they can reduce interest rates forenterprises and individuals engaged in high-tech agriculture by 0.5-1.5percentage points. They also need to simplify disbursement procedures to ensurethat these enterprises can borrow.
The Government is set to table amendments in the National Assembly to Land Lawprovisions stipulating limits on individual farm holding and to encouragedevelopment of technology-based farming models.
The Government’s plans to equitise several major agricultural enterprises andsell stakes in them will also encourage investors to enter the agriculturalsector, energising the M&A market.
This year the Government plans to equitise the Vietnam Rubber Group, SouthernFood Corporation, Vegetables, Fruits and Agro-Products Corporation, Vietnam TeaCorporation, and Vietnam Coffee Corporation.
Besides, the Government will sell stakes in them estimated at 1.643 trillion VND(64.45 million USD).
Many of the agricultural companies have strong brands as well as extensive landuse rights, which would also be attractive to investors.
The State Capital Investment Corporation (SCIC), the country’s sovereign fund,recently announced plans to sell 48.3 million shares in the Vietnam DairyProducts Joint Stock Company (Vinamilk), equivalent to a 3.33 percent stake, inOctober.
This is part of the 3.6 percent stake remaining from 2016 when it had plannedto sell 9 percent. The SCIC hopes to earn at least 7 trillion VND (308.4million USD) from the sale.
Market observers said they expect the share sale to be more successful this timethan the last time.
Vinamilk, Vietnam’s top listed firm by market value, has a 50 percent marketshare of dairy products and has seen steady earnings growth.
Last October, when SCIC sought to sell a 9 percent stake in the company,despite the ostensible interest in the company among foreign investors, itturned out to be a disappointing exercise.
There were only two bids, each for 2.7 percent, worth a combined 500 millionUSD.
They came from two wholly-owned units of Singapore-headquartered Fraser andNeave Ltd (F&N), owned by Thai billionaire Charoen Sirivadhanabhakdi.
The failure to sell out was blamed on certain reasons, one of which was thetiming of the sale: It was during Christmas when western investors are busywith other things.
The minimum price of 144,000 VND (6.35 USD), which was much higher than themarket rate, was also cited as a reason.
The SCIC wanted to wrap the whole exercise in such a short time thatconsultants did not have enough time to complete the process of book building,which refers to the process of generating, capturing, and recording demandfor shares to support efficient price discovery.
Investors had to start register and deposit between November 28 and December 9;the auction was scheduled from December 12 to 21.
The failure of the first attempt suggests SCIC needs to make some changes thistime if it expects a different outcome.
The company should announce detailed plans related to the sale and pricingearly so that potential investors have enough time to make a considered decision.
But, experts said, the company might face some problems with book running sinceVietnam lacks a proper legal framework for it.
Notable among those is a resolution to provide credit worth 100 trillion VND(4.4 billion USD) at lower than market interest rates to develop high-tech agriculture.
It stipulates that banks must cut costs so they can reduce interest rates forenterprises and individuals engaged in high-tech agriculture by 0.5-1.5percentage points. They also need to simplify disbursement procedures to ensurethat these enterprises can borrow.
The Government is set to table amendments in the National Assembly to Land Lawprovisions stipulating limits on individual farm holding and to encouragedevelopment of technology-based farming models.
The Government’s plans to equitise several major agricultural enterprises andsell stakes in them will also encourage investors to enter the agriculturalsector, energising the M&A market.
This year the Government plans to equitise the Vietnam Rubber Group, SouthernFood Corporation, Vegetables, Fruits and Agro-Products Corporation, Vietnam TeaCorporation, and Vietnam Coffee Corporation.
Besides, the Government will sell stakes in them estimated at 1.643 trillion VND(64.45 million USD).
Many of the agricultural companies have strong brands as well as extensive landuse rights, which would also be attractive to investors.
The State Capital Investment Corporation (SCIC), the country’s sovereign fund,recently announced plans to sell 48.3 million shares in the Vietnam DairyProducts Joint Stock Company (Vinamilk), equivalent to a 3.33 percent stake, inOctober.
This is part of the 3.6 percent stake remaining from 2016 when it had plannedto sell 9 percent. The SCIC hopes to earn at least 7 trillion VND (308.4million USD) from the sale.
Market observers said they expect the share sale to be more successful this timethan the last time.
Vinamilk, Vietnam’s top listed firm by market value, has a 50 percent marketshare of dairy products and has seen steady earnings growth.
Last October, when SCIC sought to sell a 9 percent stake in the company,despite the ostensible interest in the company among foreign investors, itturned out to be a disappointing exercise.
There were only two bids, each for 2.7 percent, worth a combined 500 millionUSD.
They came from two wholly-owned units of Singapore-headquartered Fraser andNeave Ltd (F&N), owned by Thai billionaire Charoen Sirivadhanabhakdi.
The failure to sell out was blamed on certain reasons, one of which was thetiming of the sale: It was during Christmas when western investors are busywith other things.
The minimum price of 144,000 VND (6.35 USD), which was much higher than themarket rate, was also cited as a reason.
The SCIC wanted to wrap the whole exercise in such a short time thatconsultants did not have enough time to complete the process of book building,which refers to the process of generating, capturing, and recording demandfor shares to support efficient price discovery.
Investors had to start register and deposit between November 28 and December 9;the auction was scheduled from December 12 to 21.
The failure of the first attempt suggests SCIC needs to make some changes thistime if it expects a different outcome.
The company should announce detailed plans related to the sale and pricingearly so that potential investors have enough time to make a considered decision.
But, experts said, the company might face some problems with book running sinceVietnam lacks a proper legal framework for it.
Unlike last time, the company should not ask bidders to make a 10 percentdeposit, they said.-VNA
VNA
