Tin mới
Greater Strength To Compete Better (15/01)
06/08/2010 - 196 Lượt xem
Mergers
and acquisitions are a form of direct investment where investors spend money to
acquire a company or merge their operations with existing businesses to boost
their competitiveness. This activity is expected to pick up strongly now that Vietnam
It is accepted that many weak businesses will not survive the torrid times ahead and they should end their existence with some grace by bowing to the inevitable and merging with stronger ones or accept to be bought outright. In addition, many foreign investors may want to buy shares of Vietnamese enterprises, while local businesses also have the need to sell part of their shares to form partnership or ease the financial burden.
Definite trend
In recent years, acquisitions and mergers have been a mainstay of business news. Kinh Do Corp., a confectionery maker, has acquired the Wall’s ice cream business from Unilever and a major stake in the soft drink company Tribeco. The Saigon Finance Joint Stock Company has merged with a commercial joint stock bank in Danang to form Viet A Bank.
A noted case of acquisition recently was that of a foreign company by a local business. Donacorp inDong Nai Province
Even foreign-invested enterprises inVietnam Vietnam
Merging and acquisition activities are often seen in the production sector due to the pressure to cut production costs. The principle is that when a company can produce on a large scale, it is able to reduce production costs significantly. Banks can merge with each other to increase their financial strength. Mergers in this sector are greatly expected in the near future.
According to the State Bank ofVietnam Vietnam
In the State corporate sector, the Government also has plans to restructure State-owned enterprises to boost their competitiveness. Besides equitization, diversification of ownership, contracting out and dissolution, many SOEs have been merged to form strong corporations, such as the Vietnam Coal and Mineral Industries Group and Vietnam Textile and Garment Group.
Great demand
According to the Investment and Urban Development Joint Stock Company (IDJ), the first company to specialize in brokering business acquisitions inVietnam Vietnam
The trading of business brings great benefits to participants. On the part of sellers, owners of some businesses can sell their factories or operations which they do not want to continue due to losses, financial difficulties, changing business conditions or strategies or other reasons. On the part of investors or buyers, besides saving costs and time spent on building factories and brands, recruiting staff and workers, applying for investment licenses, developing distribution and market and approaching customers, they can inherit the brand and even enjoy the profit of the enterprises offered for sale.
In particular, this activity will help investors minimize risks for their investment. It also has great social significance, as a successful deal can save an ailing business from bankruptcy, maintain the prestige of its owner and keep jobs for its workers.
Realizing the great demand, IDJ has set up a website — www.muabandoanhnghiep.com.vn — to help buyers and sellers meet and deal with each other. The site lists hundreds of businesses needing to sell shares or facilities. Tran Trong Hieu, director of IDJ, says the company plans to develop an English version for the site to serve foreign investors, as he forecast their great demand for buying stakes in Vietnamese enterprises.
Hieu has an ambition to expand business to all cities and provinces inVietnam U.S. Hong
Kong . The company also buys ailing businesses to
restructure them for better operations or selling to investors.
Problems
According to experts, acquisitions and mergers may face a problem, namely the lack of senior managers to run the new business so formed.
Another problem is businesses’ lack of knowledge about mergers and acquisitions and the unclear information about the businesses to be merged or acquired. In addition, there are no specific regulations governing these activities, such as the Law on Fighting Monopoly and how to evaluate the company to be merged or acquired. Nguyen Ngoc Bich, a legal expert, says disputes may arise when shareholders of the two parties disagree on the terms of merging or the price of shares.
Foreign investors engaged in merging and acquisition may face the problem of shareholding. In principle, the Investment Law does not restrict foreign investors to invest directly in Vietnamese companies, except for those operating in conditional sectors. However, at present, the current rule still restricts the capital contribution and share purchase by foreign investors at less than 30% of the charter capital of an enterprise. The rule, contained in Decision 36/2003/QD-TTg on capital contribution and share purchase in Vietnamese enterprises by foreign investors, is causing a bottleneck in the procedure for the transfer of enterprises. Lawyer Nguyen Dinh Nha from the Vision law firm says the file for company acquisition by one of his clients is being held at the HCM City Department of Planning and Investment on the grounds that there are no guidelines to make a decision.
Tran Trong Hieu, says aSingapore Vinh Phuc Province
In some cases, foreign investors have to give funds to other people to buy the over-the-limit shares in the company they want to acquire. This poses risks for the investors because the surrogate buyers may not want to continue to cooperate and disputes may arise.
Authorities have pledged to amend this rule to comply with the Investment Law andVietnam 
It is accepted that many weak businesses will not survive the torrid times ahead and they should end their existence with some grace by bowing to the inevitable and merging with stronger ones or accept to be bought outright. In addition, many foreign investors may want to buy shares of Vietnamese enterprises, while local businesses also have the need to sell part of their shares to form partnership or ease the financial burden.
Definite trend
In recent years, acquisitions and mergers have been a mainstay of business news. Kinh Do Corp., a confectionery maker, has acquired the Wall’s ice cream business from Unilever and a major stake in the soft drink company Tribeco. The Saigon Finance Joint Stock Company has merged with a commercial joint stock bank in Danang to form Viet A Bank.
A noted case of acquisition recently was that of a foreign company by a local business. Donacorp in
Even foreign-invested enterprises in
Merging and acquisition activities are often seen in the production sector due to the pressure to cut production costs. The principle is that when a company can produce on a large scale, it is able to reduce production costs significantly. Banks can merge with each other to increase their financial strength. Mergers in this sector are greatly expected in the near future.
According to the State Bank of
In the State corporate sector, the Government also has plans to restructure State-owned enterprises to boost their competitiveness. Besides equitization, diversification of ownership, contracting out and dissolution, many SOEs have been merged to form strong corporations, such as the Vietnam Coal and Mineral Industries Group and Vietnam Textile and Garment Group.
Great demand
According to the Investment and Urban Development Joint Stock Company (IDJ), the first company to specialize in brokering business acquisitions in
The trading of business brings great benefits to participants. On the part of sellers, owners of some businesses can sell their factories or operations which they do not want to continue due to losses, financial difficulties, changing business conditions or strategies or other reasons. On the part of investors or buyers, besides saving costs and time spent on building factories and brands, recruiting staff and workers, applying for investment licenses, developing distribution and market and approaching customers, they can inherit the brand and even enjoy the profit of the enterprises offered for sale.
In particular, this activity will help investors minimize risks for their investment. It also has great social significance, as a successful deal can save an ailing business from bankruptcy, maintain the prestige of its owner and keep jobs for its workers.
Realizing the great demand, IDJ has set up a website — www.muabandoanhnghiep.com.vn — to help buyers and sellers meet and deal with each other. The site lists hundreds of businesses needing to sell shares or facilities. Tran Trong Hieu, director of IDJ, says the company plans to develop an English version for the site to serve foreign investors, as he forecast their great demand for buying stakes in Vietnamese enterprises.
Hieu has an ambition to expand business to all cities and provinces in
Problems
According to experts, acquisitions and mergers may face a problem, namely the lack of senior managers to run the new business so formed.
Another problem is businesses’ lack of knowledge about mergers and acquisitions and the unclear information about the businesses to be merged or acquired. In addition, there are no specific regulations governing these activities, such as the Law on Fighting Monopoly and how to evaluate the company to be merged or acquired. Nguyen Ngoc Bich, a legal expert, says disputes may arise when shareholders of the two parties disagree on the terms of merging or the price of shares.
Foreign investors engaged in merging and acquisition may face the problem of shareholding. In principle, the Investment Law does not restrict foreign investors to invest directly in Vietnamese companies, except for those operating in conditional sectors. However, at present, the current rule still restricts the capital contribution and share purchase by foreign investors at less than 30% of the charter capital of an enterprise. The rule, contained in Decision 36/2003/QD-TTg on capital contribution and share purchase in Vietnamese enterprises by foreign investors, is causing a bottleneck in the procedure for the transfer of enterprises. Lawyer Nguyen Dinh Nha from the Vision law firm says the file for company acquisition by one of his clients is being held at the HCM City Department of Planning and Investment on the grounds that there are no guidelines to make a decision.
Tran Trong Hieu, says a
In some cases, foreign investors have to give funds to other people to buy the over-the-limit shares in the company they want to acquire. This poses risks for the investors because the surrogate buyers may not want to continue to cooperate and disputes may arise.
Authorities have pledged to amend this rule to comply with the Investment Law and
