2011 marked a busy year for corporate M&A (mergers and acquisitions) activities with a total value estimated at US$2.67 billion, 1.5 times higher than the previous year.

Unlike previous years, foreign-related M&A deals, mostly in the fields of consumer products, finance and real estate, stole the spotlight in 2011, accounting for 81.3 percent of the total amount.

Some M&A deals also emerged as a result of the withdrawal of capital by investment funds and the restructuring of domestic groups.

The three biggest M&A deals in 2011 were Charoen Pokphand Group China’s buying 70.8 percent of the share of CP Vietnam Corporation, Russian mobile phone service provider Vimpelcom’s increasing ownership ratio in Gtel-Mobile Joint Stock Company to 49 percent, and the International Finance Corporation’s (IFC) buying 10 percent of Vietinbank’s stake.

The biggest inflows of capital came from Japan with big deals between SBI Securities Company Limited and FPT Securities Company (US$25 million); Nikko Cordial Securities Inc and PetroVietnam Securities Incorporation (US$6.9 million); and Unicharm and Diana (US$128 million).

Many of M&A transactions in 2011 were related to the withdrawal of capital by investment funds. The most prominent case was Vietnam Opportunity Fund selling 24.9 percent of Hanoi Liquor Joint Stock Company’s stake to Diageo and 24 percent of Hoan My Corporation’s share to India’s Fortis. Next in line was Dragon Capital which sold 6.6 percent of Sacombank’s stake after 10 years of investing in the bank.

The withdrawal of capital by investment funds is expected to continue in 2012 and the following years, when many are due to expire after five years of operation in Vietnam. This will be done more easily following the decision to allow close-end funds to be converted into open-end ones.

Consumer goods, banking and real estate top the list of M&A deals

The consumer goods sector took the lead with the value of 2011 M&A, reaching over US$1 billion, followed by the banking, securities and real estate sectors with major deals between IFC and Vietinbank, IFC and An Binh Bank; LienVietBank and Vietnam Postal Savings Service Company.

Despite facing a lot of difficulties in 2011, the real estate sector’s total deals were worth US$250 million, not to mention some remaining in the bag.

Restructuring businesses through M&A

Many Vietnamese enterprises have succeeded in restructuring their operations through M&A deals. For example, FPT Trading, FPT Software and FPT FIS swapped shares owned by their minor shareholders to become 100 percent FPT-owned subsidiaries. Hapaco group also issued 1.5 million shares in an exchange with small shareholders at Hapaco Hai Au and Hapaco Yen Son, and canceled the listing of these two companies on the Hanoi Exchange.

Especially, the biggest M&A deal by Vincom and Vinpearl in the fourth quarter of 2011 was considered a typical horizontal merger of two Vietnamese companies, with the aim of expanding and diversifying business operations.

The deal between Vincom and Vinpearl put an end to the successful year for M&A activities in Vietnam.

VOV