Carlsberg CEO Mr. Cees’t Hart told the brewer’s first quarter 2017 trading statement’s conference call on May 4 that negotiations with the Ministry of Industry and Trade over an additional stake in the State-owned Hanoi Alcohol Beverage and Corp. (Habeco) has been “hot, complicated, and cumbersome.”

Over the course of the last six weeks, Mr. Hart has visited Vietnam three times to discuss raising its stake in Habeco. 

“The process is no better than we anticipated. It just takes time,” he said.

He was quoted in February as saying that Carlsberg had not been able to make a bid and there was also uncertainty over whether the Vietnamese Government would abide by Carlsberg’s first right of refusal. 

“Carlsberg will bid for Habeco in March or April,” he said at the time.

The government is seeking to equitize Habeco, the country’s second-largest brewer, by selling its 82 per cent stake. Carlsberg, which already has 17 per cent, holds priority purchase rights for a 60 per cent stake.

While Habeco and Carlsberg Vietnam were unavailable for comment at the time of writing, it seems that both sides have found common ground after multiple visits by Mr. Hart. 

As he is now expecting an update from the government during the second quarter, it might have accepted a higher bid from the Danish brewer.

“Vietnam wants to equitize three companies this year, and it seems that the first is Habeco, but that changes from time-to-time: first Sabeco then first Habeco,” he said.

The government said last October that it would announce the results of negotiations on its priority purchase rights with Carlsberg by the end of that month. It is still not clear why the process has been drawn out.

The government announced last August that it wants to sell its 82 per cent stake for $404 million, or about VND48,000 ($2.11) a share, which according to the CEO of Carlsberg Vietnam, Mr. Tayfun Uner, is a reasonable valuation, or VND50,000 ($2.2) per share - the same price Carlsberg paid in the 2008 IPO.

The government is now keen to take the market price as a reference for the deal. After switching from the Unlisted Public Company Market (UPCoM) to the Ho Chi Minh Stock Exchange (HoSE) on January 19, shares in Habeco rose 15 per cent in their first day of trading to VND147,000 ($6.50) from a starting price of VND127,600 ($5.65), valuing the Vietnamese brewer at $1.5 billion.

But a 21.1 per cent year-on-year decline in Habeco 2016 net profit to VND740.1 billion ($32.7 million) saw its share price head downwards. It closed at VND114,000 ($5.03) on February 9 before hitting a low of VND74,000 ($3.25) on April 5. 

While the price is driven by market supply and demand, the previous surge in the company’s share price did not accurately reflect the underlying value of the business and is mainly due to speculative buying on very thin volumes, Mr. Uner said.

Habeco’s pre-tax profit during the first quarter rose by 45 per cent year-on-year to VND42 billion ($1.85 million). 

On May 8, its share price stood at VND86,000 ($3.78) as at 11am Vietnam time.

With a young, beer-loving population, Vietnam is among Asia’s largest consumer of the beverage, putting it on the radar of international brewers. 

The country’s beer market grew at an average compound annual rate of 7 per cent from 1999 to 2015 and touched 4 billion liters in 2016. 

Growth is anticipated at around 4 per cent to 2021, data from researchers Canadean, quoted by investment bank Liberum, shows.

Kirin Holdings, Asahi Group Holdings, Thai Beverage, Heineken, and Anheuser Busch Inbev SA are among some 20 other investors that have expressed interest in the sale.

Habeco’s share price soared when a limited number of shares were listed in October, as investors raced to snap them up before the planned sale. 

The brewer has a market share of about 20 per cent in Vietnam.

VN Economic Times