Vietnam begins 2024 with M&A flourish

2024 is shaping to be a favorable year for merger & acquisition (M&A) activities in Vietnam with several firms striking early deals and others announcing their intentions to do so.

On February 9, Coteccons Construction JSC, listed on the Ho Chi Minh Stock Exchange (HoSE) as CTD, announced the completion of procedures to acquire 100% of two companies, Sinh Nam Metal (Vietnam) Co., Ltd. and UG Mechanical and Electrical (Vietnam) Co., Ltd.

The acquisition is consistent with the company's development orientation, said Coteccons CEO Vo Hoang Lam.

He said Coteccons plans to diversify revenue sources instead of diversifying industries while remaining focused on its core business - construction. It will strongly engage in the fields of public investment, infrastructure, and social housing this year, he added.

Pham Minh Tuan, vice chairman of Bamboo Capital, said that after more than a year of market research and policy analysis, the group has decided to invest in waste-to-power development through M&A, focusing on projects that have already acquired licenses. It plans to deploy waste-to-energy projects in four provinces and cities in Vietnam.

Several other businesses have also unveiled their M&A deals and plans.

BAF Vietnam Agriculture JSC now owns 99.9% of charter capital at Thanh Dat Gia Lai CNC Livestock JSC.

DIC Corp (HoSE: DIG) has said it plans to buy 1.8 million shares of wholesale household appliances dealer Thien Quang Trading Development JSC, equivalent to a 35.5% stake.

M&A opportunities

Globally, M&A activities had stagnated last year due to economic difficulties and tight monetary policies. Bloomberg data shows that the value of M&A deals and related transactions across world decreased by nearly 25% year-on-year in 2023 to $2.7 trillion, the lowest annual total since 2013.

In Vietnam, consultant KPMG Vietnam estimates the total value of M&A deals in the first 10 months of 2023 at $4.4 billion, down 23% year-on-year.

Nguyen Cong Ai, KPMG Vietnam's deputy general director, said 2023 saw many unfavorable factors for M&A activities, but there were “many motivations” this year, including strong FDI inflows, political stability and the signing of trade agreements.

Furthermore, with inflation kept below the 4% target, Vietnam's GDP growth is forecast to return to 6-6.5% in 2024 and 6.9% in 2025, and public debt below the ceiling level of 60% of GDP, he noted.

“These figures show that 2024 could be a favorable year for M&A investors targeting strategic opportunities in the dynamic Vietnamese market,” Ai said.

Deputy Minister of Planning and Investment Tran Duy Dong has said that difficult times is the right time for domestic businesses to reconsider their strategies, seek new growth models and focus on restructuring production and business activities towards greater sustainability. "Many businesses have developed strategies and plans to find partners in development and M&A is a preferred path."

Nguyen Trong Thong, chairman of real estate developer Ha Do Group (HoSE: HDG), said at a conference earlier this month that the group will focus this year on real estate and energy sectors, promoting M&As while looking to increasing investment in industrial park projects in northern provinces like Hung Yen, Thai Binh, Nam Dinh and Quang Ninh.

Similarly, since the second half of 2022, Bamboo Capital has changed its strategy from expansion to narrowing investment activities, repaying and recovering debt.

On January 31, BCG Energy JSC - a member of Bamboo Capital Group (HoSE: BCG) announced that it had signed an in-principle contract on share purchase and sale with Tam Sinh Nghia Investment-Development JSC under which the latter would become a member of the group's ecosystem.

Tam Sinh Nghia operates waste incineration, treatment and classification facilities in Ho Chi Minh City, Long An and Kien Giang. After the merger, BCG Energy will build two waste-to-energy incineration plants in Ho Chi Minh City and Long An.

Pham Minh Tuan, vice chairman of Bamboo Capital, said he expected positive changes in 2024, adding that the company has prepared resources to expand operations when market conditions become favorable.