Hong Kong-incorporated Nissin Foods announced Thursday the acquisition of a 67 percent stake in instant noodles maker Nissin Vietnam for $9.5 million.
Nissin Foods, a subsidiary of Japanese convenience foods and instant noodles pioneer Nissin Foods Holdings, will also make a $2 million capital contribution to Nissin Vietnam.
The acquisition is based on an agreement with Nissin Foods Asia, which will hold the remaining 33% stake in the Vietnam unit.
Nissin Foods said the acquisition will help expand its business footprint geographically and give it “greater flexibility in deploying production in Vietnam to respond to increasing market demand and the changing business environment.”
Nissin Vietnam runs a six-hectare factory in the southern province of Binh Duong, manufacturing and distributing instant noodles. Popular products in Vietnam include Cup Noodles, Nissin Raoh instant ramen, and Korea-flavored instant noodles.
“The acquisition of Nissin Vietnam will enable greater flexibility in resource allocation and better cost management, thereby strengthening the overall competitiveness,” said Nissin Foods CEO Kiyotaka Ando.
The instant noodles market in Vietnam has witnessed substantial growth in 2019-2022, Nissin Foods said, noting that the Covid-19 pandemic prompted consumers to become more health-conscious and develop a tendency to select premium instant noodle products. It said this trend would continue and create ample opportunities for the expansion of premium products in Vietnam.
Nissin Foods made the assessment despite Nissin Vietnam’s recorded post-tax net losses of $2.5 million and $1.4 million in fiscal years ending March 2022 and March 2023, respectively.
The demand for instant noodles in Vietnam was about 87 servings per capita a year in 2021, the highest figure in the world, according to Nissin Foods Holdings’s financial report for the third quarter of fiscal year 2023. Other major consumers were South Korea with 73.1, Nepal with 54.5, Thailand with 51.9, and Indonesia with 48.7.