Although detailed information about the electronics chain to be acquired by Mobile World Investment Corporation (MWG) has not been released yet, according to rumours, the chain might be Tran Anh Digital World JSC (Tran Anh—ticker TAG on HNX), a big rival of MWG, especially in Northern Vietnam.

As reported by the newswire VnEconomy, on August 3, 2017, Nguyen Duc Tai, chairman of MWG, confirmed that MWG “has nearly finished negotiating” on the purchase of an electronics chain. However, detailed information has not been released yet, but Tai revealed that “If they think carefully, people can guess the electronics chains that MWG will acquire.” 

Why Tran Anh?

It is predicted that the rumoured mystery chain is Tran Anh, however, the company itself has not confirmed this information.

Coincidentally, on August 4, TAG shares of Tran Anh rose to VND33,000 ($1.5), a record high for a long time.

Some people raised the question that if the rumor is true, why would MWG chose an electronics retailer in Northern Vietnam, and why Tran Anh.

A leader of Tran Anh’s competitor said that in the southern region, the The Gioi Di Dong and Dien may XANH chains have been strong enough to compete with other rivals.

“In the northern market, the Dien may XANH chain has not gained such success,” he said.

According to many insiders in the Vietnamese electronics industry, any deal would be successfully negotiated when buyers and sellers could come to an agreement on purchase and sale. Besides, a leader of an electronics chain in Northern Vietnam said that the purchase should be based on the market coverage of the chain, and Tran Anh is one of the two electronics retailers with the largest number of outlets in Northern Vietnam.

In addition, Tran Anh was listed on the stock exchange, so it will be easier to price the acquisition.

“Purchase to dominate”

As of December 12, 2016, Tran Xuan Kien, chairman of Tran Anh, and his wife, Do Thi Thu Huong, were jointly holding 11 million TAG shares, an equivalent to 44 per cent of the chartered capital.

Besides, Huong’s sister Do Thi Kim Lien has held 5.88 per cent of the chartered capital, and Kien’s sister Tran Thi Van Trang and her husband Hoang Anh Tuan owned 6 per cent of Tran Anh’s stakes at the time. The remaining 30.82 per cent was held by Nojima Corporation from Japan.

According to its financial statement in the first quarter of 2017, Tran Anh’s sum for investment was low at VND8.5 billion ($374,000), a very small amount compared to the VND75.7 billion ($3.3 million) for the whole year of 2016. Its total assets also significantly decreased. At the end of the first quarter of 2017, its total assets were VND1.2 trillion ($52.8 million), a reduction of VND200 billion ($8.8 million) compared to the VND1.4 trillion ($61.6 million) at the end of 2016.

A leader of Tran Anh said that in 2017, the company does not plan on expansion and the number of newly opened outlets may stay nearly unchanged in comparison with 2016.

Other questions focus on the magnitude of stakes to be sold to MWG, how many shares this entails and whether the Japanese group will sell down its holdings or continue as a big shareholder.

Recently, when asked about acquiring another electronics chain, ai said that as Dien may XANH is a big retail system, MWG will not purchase a small number of shares of another electronic retailer to be its partner, instead, it will aim to purchase a large enough holding to dominate the target, or even purchase the entire stakes in it.

Also, he revealed that MWG is asking for shareholders’ approval to spend VND2.5 trillion ($110.3 million) on purchasing an electronics chain and a pharmaceutical chain. However, regarding the chain of pharmaceutical stores, MWG has not decided on a partner yet. 

VIR