Mergers & Acquisition: many problems remain

16:44' 13/07/2007 (GMT+7)

Vinamilk has joined hands with Campina to develop together VietNamNet Bridge – There were 18 mergers and acquitisition (M&A) cases in Vietnam in 2005 totalling US$61 million. The figure rose to 32 M&A in 2006, with a total value of $245 million. M&A to quickly develop M&A is a very important form of foreign direct investment (FDI). For Vietnam, M&A activities have been performed but it is still a new form of business. Thus, research and seeking solutions for promoting M&A will contribute to create a new and important FDI attraction channel in Vietnam in the coming time, said Nguyen Thi Bich Van, Deputy Head of the Foreign Investment Agency under the Ministry of Planning and Investment. In the past ten years, these activities have developed robustly and created a fever in many developed and developing countries. FDI performed in the form of M&A accounts for 57%-80% of the total FDI in the world. According to PricewaterhouseCoopers, there were 18 M&A in Vietnam in 2005 with a total value of 61 million. The figure was nearly double in 2006, 32, valued at $245 million. “This year and in the next few years, M&A operations will develop quickly in Vietnam, especially in the fields of banking, financial services, consumer goods, textile-garment products and retailing,” said Bui Van Tuynh, General Director of the Dai Viet Securities Joint Stock Company (DVSC). According to some economic experts, the trend of forming multi-area groups or cross investment in the form of becoming strategic shareholders is one way of economic concentration and this will facilitate M&A activities. Problems… According to Mr. Bui Van Tuynh, some companies conducted M&A some years ago, but this was not true M&A because those cases were done under the recommendation of management agencies. It was not until the Foreign Investment Law 2005 took effect that M&A was really able to assume its true nature. Many transactions have been conducted successfully, for example the affairs between Campina milk group of the Netherlands and the Vietnam Dairy Products JS Company, Japan’s Daii insurance group and Bao Minh CMG. However, along with the development of M&A, the ineffectiveness of the Investment Law 2005, Enterprise Law 2005, the Securities Law 2006 and the differences in those laws have hindered M&A operations. Many problems associated with M&A have been mentioned and Vietnamese companies have asked the government to consider dealing with those problems soon to promote M&A. “According to international experience, M&A is an important factor for economic development, helping local firms access technology, management, skills on market and exports. So we need a clear, sufficient legal corridor as the foundation for M&A activities, to restrict economic concentration and unhealthy competition,” said Mr. Tuynh. (Source: Viet Nam Net)