VietNamNet Bridge – Vietnamese enterprises have become the easy prey for foreign investors as they are getting cheaper than ever.

The story about the Dutch Heineken buying back APB, a brewery company which owns the favorite Tiger beer brand in Asia, has become a hot topic in the world market.

Meanwhile, the merger & acquisition market in Vietnam has been shaken by the news that Uni-President is moving ahead with its plan to buy Tribeco, a once well- known drink brand in Vietnam. The South Korean Lotte has also been shaking the domestic sweets market with its investment projects. Especially, analysts believe that the group is the biggest threat for a Vietnamese sweets brand – Bibica.

The WTO effects

Foreign investors, who attempted to swallow Vietnamese enterprises, could not fulfill their plans in the first years after Vietnam joined WTO, because they faced the sure-fire defensive measures taken by Vietnamese enterprises.

At that time, foreign investors could not enjoy the investment and tax incentives big enough to hold advantages over Vietnamese enterprises.

That explains why in 2007, South Korean Lotte Group reportedly failed to take over Bibica.

However, analysts believe that the situation has changed so much in recent years, predicting a new wave of M&A to occur when foreign investors attempt to take over Vietnamese enterprises.

In an effort to dominate the sweets market, Lotte has suggested changing Bibica Joint Stock Company into Lotte-Bibica Company. Instead of spending money to help the Vietnamese partner restructure the organization to survive the current difficulties, Uni-President ignored the difficulties and let the company go bankrupted. Especially, it has revealed the intention to buy back Tribeco.

Analysts have recalled the story of Bao Minh CMG which was bought back by Japanese Dai-ichi insurance group, saying that Vietnamese enterprises should learn the lesson from the story.

Vietnamese brand owners on tenterhook

Vietnamese businessmen have realized that they have become the “aiming points” of foreign investors, who tend to leave the developed economies bogged down in economic recession such as the US and Europe and invest in the third world countries to optimize profits.

It’s obvious that Vietnam is a market with great potentials for the investors, especially when Vietnamese businesses have become very cheap. It is estimated that one needs to have 5-10 million dollars only to invest in the small and medium enterprise sector.

While the monetary markets, real estate and stock markets all have decreased dramatically in the crisis, the M&A market has become more and more bustling.

Andy Ho, Managing Director of VinaCapital, has predicted that the Vietnamese M&A market this year may witness a sharp growth rate of 20-40 percent in comparison with 2011. KPMG has reported that at least 35 M&A cases successfully occurred in the first four months of 2012.

The presence of foreign investors in the Vietnamese market is believed to bring a lot of good things. Analysts believe that foreign investors would rescue the Vietnamese enterprises on the verge of bankruptcy, because they can help settle three big problems – the lack of capital, technology and crisis management experience.

However, state officials keep cautious when talking about the impacts of the M&A wave. Deputy General Director of the HCM City Stock Exchange Le Hai Tra said a lot of noisy M&A deals have been carried out recently, but it’s still too early to say about the efficiency.

Since the legal framework about M&A activities is still under the compilation, the loopholes of the laws would be exploited by foreign investors, which may make Vietnamese enterprises suffer complete loss.

Do Thien