Vietnamese businesses struggle to escape foreign big sharks

VietNamNet Bridge – Vietnamese businesses, which are thirsty for capital, want to call for foreign capital to improve the business situation. However, they fear that they may become the aiming points of the foreign companies’ hostile takeover plans.


Vietnam, hostile takeover, foreign investors, Bibica, Lotte, shareholders

A miss as good as a mile

The foreign partner Lotte from South Korea has exposed its intention to take over Bibica. The Vietnamese sweets manufacturer now has to struggle hard to maintain its business and the well known brand it spent years to build up.

When asked about the current situation of Bibica, General Director Truong Phu Chien said Lotte now holds 38-39 percent of Bibica’s stakes, not the overwhelming proportion of stakes. Vietnamese shareholders now hold more than 40 percent.

The Saigon Securities Incorporated (SSI), a big shareholder, now holds about 20 percent of stakes and it plans to raise the proportion to 35 percent.  Chien thinks that in the current circumstances, it would be not easy for Lotte to turn Bibica into a business of its own.

However, it would be a hard struggle for the board of management of Bibica to retain its business. Bibica needs to have good business performance in order to obtain the support from shareholders.

Dr. Nguyen Ngoc Huy from the HCM City National University commented that 38 percent is a big proportion of stakes which allows Lotte to have a strong voice in the business. However, if Lotte wants to go further and acquire the remaining stakes, it would have to buy the stakes at very high prices, though Lotte, a powerful conglomerate is willing to do that.

“This proves to be the most reasonable way for the foreign business to take a shortcut to penetrate the Vietnamese market,” Huy commented.

Taking over the Vietnamese potential businesses is the way the foreign investors in many business fields have been following to conquer the domestic market. This also means that Vietnamese businesses have to “stand on the defensive” and keep watchful over the possibility of being taken over by foreigners.

My Hao Cosmetics is an example. Luong Van Vinh, the General Director of My Hao, has vowed to exist in the market together with the big guys. However, it is really a hard struggle. The economic difficulties have badly affected its operation. Deciding to obtain the 15 percent growth rate earlier this year, but the sales increase remains modest, which has forced the company’s board of directors to consider a lot of different ways to develop.

Vietnamese businesses told not to strive for overly hot development

Chien of Bibica said that when calling for foreign investments, Vietnamese businessmen should set up the reasonable proportions of stakes for foreign partners to avoid possible problems.

If the foreign partners hold less than 25 percent of stakes, they would only target the business cooperation. If the partners hold 25-35 percent of stakes, they would have the right to veto the decisions of the board of directors. If they hold 38 percent of stakes like in Bibica, things would be complicated if the sides cannot reach agreements.

Chien went on to say that Vietnamese businesses tend to look for big partners which can provide powerful financial support. However, if so, they would be easily fall into the reliance on the partners.

Huynh Anh Tuan, General Director of SJC Securities Company, believes that Vietnamese businesses should not strive for overly hot development. If they want to develop rapidly by relying on foreign sources, they would have to pay a heavy price for this.

Manh Ha

Vietnam, hostile takeover, foreign investors, Bibica, Lotte, shareholders
 
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