|
Merger and acquisition activity to remain high: Report
Most investors will likely move forward on merger and acquisition deals more cautiously this year and much will depend on the pace of equitization of major corporations such as MobiFone, according to British accounting and consulting firm Pricewaterh
PricewaterhouseCoopers said the interest in merging and acquisition activities (M&A) in Vietnam would remain high as foreign investors continue to view the economy’s long term potential “in a positive light.”
In a recent report, the British accounting and consulting firm said M&A activity was high in Vietnam last year.
While successful domestic companies have been increasingly open to deal making as they pursue expansion strategies, companies struggling to cope with the changing economic environment were more open to discussions regarding the sale of equity stakes to domestic and foreign suitors, the report said.
However, while the number of deals increased to 146 compared to 108 in 2007 and only 38 in 2006, the total value of these deals came to only US$1 billion, compared to the $1.7 billion recorded in 2007.
PwC said this reflected the slow pace of certain larger deals and equitization since most of the large deals in 2007 pertained to newly equitized state-owned enterprises.
In terms of deal value, Vietnam suffered a bigger percentage setback (-41.3 percent) than other countries and regions. However, the percentage increase (35.2 percent) in the number of deals announced is well above global and regional averages.
Foreign acquirers continued to initiate many of the larger deals despite ownership restrictions remaining in certain sectors with the number of deals between Vietnamese companies doubling from 2007.
Yet the PwC report advised readers to “exercise caution” since “the majority of deals are conducted in private and therefore disclosure of deal values and other particulars is limited.”
Slower pace of talks, equitization
The report acknowledged an increase in the level of understanding among the Vietnamese business community of the mechanics of deal-making, including the importance of due diligence, and an improved appreciation of valuation techniques.
PwC expected that most investors will likely move forward on deals more cautiously than they did prior to mid-2008 and that negotiations on pricing and deal terms will in general be tougher and more time consuming to conclude.
“This will undoubtedly affect both the number and the size of deals involving such foreign acquirers,” the report said.
“Much will also depend on the pace of equitization of major corporations, such as MobiFone, and on whether already equitized state-owned enterprises, such as Vietinbank and Sabeco, close deals to sell significant stakes to foreign investors.”
PwC also expected increased foreign investment via M&A in those sectors now open to 100 percent ownership by foreigners, retail being one of the sectors with the highest potential.
Further realignment and consolidation are also likely amongst Vietnamese companies operating in those sectors suffering most from ongoing economic problems and stock exchange performance, for example the smaller banks, securities companies, steel manufacturers and real estate developers.
thanhnien
|
