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Foreign investors turn to M&A to increase SOE holdings

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Foreign investors at state-owned firms are looking to increase their holdings via M&A deals to solidify their footholds in Vietnam.

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Thailand’s SCG, through its subsidiary Nawaplastic Industry Co., Ltd., expressed interested in buying 818,609 shares in Binh Minh Plastic JSC (BMP) to increase its holdings to 50.89 per cent, equalling 41.66 million shares. The transaction is expected to occur between April 4 and May 3.

Earlier on March 19, State Capital Investment Corporation (SCIC) completed the handover of 24.14 million BMP shares to Nawaplastic, after the Thai firm won at the auction organised on March 10.

As a result, Nawaplastic spent approximately VND2.329 trillion ($102.33 million) to buy 24.139 of the 24.159 million shares on offer at the initial price of VND96,500 ($4.24). The deal increased Nawaplastic’s holdings in BMP to 49.9 from 20.4 per cent.

SCG expressed its ambition to increase presence in the domestic plastic market by buying into BMP and Tien Phong Plastic JSC, which are two of the largest plastics manufacturers in the country. Accordingly, while Tien Phong Plastic ’s products are covering the northern market, BMP’s products are popular in the south.

In 2012-2013, Nawaplastic spent VND487 billion ($21.3 million) buying 10.33 million NTP shares to become the second-largest shareholder with 20.82 per cent, following State Capital Investment Corporation (SCIC) with 37.1 per cent. After receiving dividend via stocks, the Thai firm currently holds 21.27 million shares in NTP.

Besides, in 2012, Nawaplastic also purchased 7.13 million ordinary BMP shares, representing 20.4 per cent of the charter capital, for VND352 billion ($15.4 million). Additionally, after being paid dividend via stocks, the Thai firm currently holds 16.7 million BMP shares, equaling 20.4 per cent of the stakes.

After SCIC issued the plan to divest from BMP, Nawaplastic decided to drop Tien Phong Plastic to increasing its holding in BMP.

BMP manufactures and trades civil and industrial products made of plastic and rubber.

Despite being one of the largest plastic manufacturers in Vietnam, BMP recently lost market share to foreign and domestic competition. According to its audited 2017 financial statement, BMP’s after-tax profit was VND464.7 billion, down VND6.6 billion on-year.

Source: VIR

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