The post-merger and acquisition business efficiency of Nguyen Kim Trading JSC remains uncertain, as more than three years after it engaged in an M&A deal with leading Thai retailer Central Group, it declines to share information about its business performance with the public.

The deal might have sunk into oblivion if the name of Nguyen Kim had not recently appeared in local media, after the home appliance retailer was forced to pay tax arrears and administrative sanctions totalling more than VND148 billion ($6.5 million) to the Ho Chi Minh City Tax Department.

The professional circle took the occasion to scrutinise the company’s M&A deal, which took the media by storm at the time, as well its business performance since coming under the control of Thai billionaire family Chirathivat.

Since teaming up with Central Group, Nguyen Kim’s business performance was kept from the public, with the information related to new store launches or business indexes remaining unpublicised. Meanwhile, its listed rival The Gioi Di Dong has made all business information available to the public to prove how far it has left behind its business competitors.

More than one year after Nguyen Kim engaged in the M&A deal, The Gioi Di Dong’s 2016 annual report presented home appliance market share figures showing that the company’s store chain Dien May Xanh ranked second, with about 8 per cent of market share, reaching VND4.4 trillion ($194.6 million) in revenue. Nguyen Kim remained in the top position, retaining a 12-per-cent market share, while Dien May Cho Lon was in the third position with 7.5 per cent.

Although Nguyen Kim did not announce its business revenue, outsiders estimate the company’s revenue at about VND6.6 trillion ($292 million) for the 2015 fiscal year. Compared to the company’s revenue in 2013, which amounted to VND8.4 trillion ($371.6 million), it seems Nguyen Kim took a hit after shaking hands with the Thai business partner.

The figures saw major changes in 2017. The Dien May Xanh chain seized up to 30 per cent of market share, whereas Nguyen Kim and several other brands held a total of 30 per cent. As of now, Nguyen Kim is operating 56 stores across the country, while the figure for Dien May Cho Lon is 60, and Dien May Xanh with a whopping 695.

“Nguyen Kim now operates 56 stores, but its revenue is almost the same as when it had only 21 stores at the time it was aquired by Central Group. Central Group might have had ambitious plans when it acquired Nguyen Kim, but the targets proved hard to reach, especially after a change in the company’s top management,” said a senior retail expert.

When The Gioi Di Dong bought store chain Tran Anh, there were also changes to the latter’s management positions, but the implications were viewed in a different light to Nguyen Kim’s.

“The Gioi Di Dong itself did not need the Tran Anh brand. What they really needed were Tran Anh’s great locations, which they lacked. Besides, the human resources and internal system of The Gioi Di Dong were better than Tran Anh’s,” the expert said.

A representative from Nguyen Kim said that there are several reasons for the company’s revenue going up and down in the post-M&A period, but human resources seem not to be a reason.

“Dien May Xanh has been opening massive amounts of stores, but Nguyen Kim’s revenue per store is better than Dien May Xanh’s. It proves more costly for Dien May Xanh to maintain the whole system,” said the representative. “Each company’s business strategy has its advantages and disadvantages. Nguyen Kim is confident to keep its market niche in the medium -range and high-end customer segment. Dien May Xanh could not sell as many TV sets above 65 inches as we did. They sell a majority with lower profits.” The information that Nguyen Kim was bought by a Thai retailer first became public when Thai securities firm Bualuang enacted an analyst report about the performance of Robinson Department Store, a member of Thailand’s leading retailer Central Group.

According to the report, Power Buy, a leading Thai home appliance system in which Robinson Department Store holds 40 per cent, bought a 49-per-cent stake of NKT New Solution and Technology Development Investment JSC, which, in turn, owned 100 per cent of Nguyen Kim. NKT came into being on October 8, 2014 with VND800 billion ($35.3 million) in charter capital, equal to that of Nguyen Kim.

In early 2015, Nguyen Kim officially fell into the hands of the Thai partner after the company changed its business registration certificate due to changes to the general director position and legal representatives. The new CEO was 48-year-old Jariya Chirathivat, a graduate of Clark University in the US and a member of the Chirathivat family, the founders and current managers of Central Group.

The scenario of Thai entrepreneurs acquiring Nguyen Kim seemed to repeat itself with the case of leading Vietnamese brewer Sabeco being bought out by Thai billionaire Charoen Sirivadhanabhakdi, chairman of Thailand’s largest brewer Thai Beverage or ThaiBev. Recently, Sabeco’s top management positions, including the chairman and sales and financial directors, were taken over by Thai people. The deal happened last year, when Vietnam Beverage Ltd. spent $4.8 billion to acquire a 53.59-per-cent stake in Sabeco. Vietnam Beverage had reportedly acted as a cover for ThaiBev to acquire Sabeco.

Vietnam Beverage also reported changes to its leadership positions on December 21, 2017, only three days after Sabeco’s initial public offering. ThaiBev senior vice president Vaewmanee Soponpinij became Sabeco’s director as well as its legal representative.

VIR