In the context of international integration deepening today, Vietnam’s economy attracts more and more attention and attention of foreign investors. This can be considered a great advantage and driving force for economic development. One of the prominent and increasingly popular commercial activities is M&A, also known as business buying and selling. Large foreign companies and corporations tend to acquire existing businesses in Vietnam that already have a market share in the market to do business in order to maximize profits and save time in branding. However, investment activities of foreign investors in Vietnam will have to meet many strict conditions to ensure their investment activities are always transparent and consistent with the economic management mechanism of Vietnam.
According to the provisions of the Law on Investment, enterprises with foreign investors accounting for 50% or more of charter capital will have to complete investment procedures as well as meet investment conditions for foreign investors. Therefore, in order to avoid the complicated legal provisions of the investment law, many foreign investors have applied “legal techniques” to carry out the acquisition of businesses in Vietnam without being entangled. into troublesome legal matters.
In this article, we will analyze based on a typical M&A deal that is ThaiBev’s acquisition of Sabeco.
A summary of the legal structure of the transaction is as follows:
– ThaiBev through Int’l Beverage Holding (based in Hong Kong) to own 100% of the capital of Beerco, a legal entity established in Hong Kong
– Beerco then contributed 49% capital to Vietnam F&B Alliance Investment (established on September 27, 2017 with charter capital of VND 200 million, then increased capital to VND 681 billion)
– Next, Vietnam F&B holds 100% capital of Vietnam Beverage (VietBev).
On the afternoon of December 18, 2017 at the Ho Chi Minh Stock Exchange (HoSE), a competitive auction of shares of the Saigon Beer – Alcohol – Beverage Corporation (Sabeco) took place. As a result of the auction, Vietnam Beverage Co., Ltd (VietBev) successfully bought 53.6% of SAB’s shares at the price of 320,000 VND/share, equivalent to 4.8 billion USD.
According to the 2014 investment law, because Vietnam F&B is not a foreign investor, but a foreign-invested economic organization (because a foreign investor, BeerCo (HK) holds 49% of the capital/ shares), the fact that Vietnam F&B owns 100% of capital/shares in VietBev does not make VietBev a “foreign-invested economic organization”. It can be seen that the approval of two classes of companies established in Vietnam is a way for ThaiBev to indirectly own controlling shares in Sabeco in a legal manner in the context that the law still does not allow economic organizations. foreign capital owns more than 49% in Sabeco.
As part of the transaction structure, ThaiBev only indirectly holds 49% in Vietnam Beverage, the remaining 51% is held by Vietnamese people. According to the ThaiBev filing published on the Singapore Stock Exchange, one Vietnamese shareholder is an insider of ThaiBev’s beverage distribution subsidiary in Vietnam, the other Vietnamese shareholder is a consultant for the deal. this.
Thus, with this method, ThaiBev indirectly dominates Sabeco. This method has become a typical example for foreign investors’ M&A deals with Vietnamese enterprises, helping foreign investors avoid a lot of complicated legal procedures of investment law. private in Vietnam.
Currently, although the Law on Investment 2020 comes into force with many changes, however, in terms of nature and method, foreign investors can still apply this method to invest in Vietnam through M&A.
Above is the article about “Legal techniques help for foreign companies buy Vietnamese business” by Apra Law Firm. If you have questions or comments about the issues mentioned in the article and need to be answered, please contact the hotline for advice and support.
Source: Vietnam M&A Case Study: ThaiBev and Sabeco (Part 2) – English Version (trendinhphowall.com)
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