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What is the next M&A deal in 2020 after Tiki & Sendo?

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Two local e-commerce platforms Tiki and Sendo finally reached the merger deal. Earlier, VinCommerce and VinEco of Vingroup were also merged with Masan Consumer Holding. 

These M&A deals might be just a beginning of other M&A deals which seem to arise this year, especially under the great impact of COVID-19 outbreak on Vietnam economy. 

 

Why M&A occurs?

Instead of starting up new company, investors decide to invest through M&A to cut cost and save time growing their businesses. Especially, they would be in most favor of M&A which is at competitive cost. 

Apart from the goals of financial and strategic achievement to overcome crisis, many M&A deals derive from the purpose of nurturing the business and finally selling it out with a higher deal.

Some M&A deals have actually raised concern for the government for the market being penetrated by foreign investors. It is risky and inevitable when these deals happen for the demand of ensuring the connect and continuity of the world supply chain.

In ASEAN countries, M&A is due to cope with development gap among countries as well as global political volatility.

 

Current waves of M&A market in Vietnam

Vietnam M&A market is now attracting most concern from foreign investors and businesses. Korean investors are now focusing on developing multidisciplinary shift in Vietnam instead of on apparel and manufacturing. They also expect to pioneer in finance sector, banking and stock market. With the support of EVFTA, more M&A deals in Vietnam are expected to initiate in renewable energy, semiconductor technology, etc.

 

The estimates of M&A value in 2020

According to a forecast of MAF and CMAC, M&A value in 2020 would be at scale of US$7-7.5 billion which is equivalent to that of 2018-2019 period. Industries such as telecommunications, energy, pharmaceuticals and education are also expected to form much of Vietnam M&A market in the future.

Many experts believe that Asian investors mostly from Korea, Japan, Thailand and Singapore will be most active and continuously make effort to dominate the market. In particular, foreign investors are more likely to participate where large SOEs have divestments.

 

Foreign Indirect Investment through M&A

Experts has pointed out that foreign investors can save much initial cost and make use of the local market through their acquisition of stakes in local firms. In reverse, quite many local firms are in need of financial support to expand business. In another way, they can allow foreign investors to inject capital and get involved in management and administration activities.

As the competition among brands has been much challenging than ever in terms of PR & marketing, technology updating and finance allocation, especially since COVID-19 outbreak, joining M&A market would bring about bilateral benefit and moreover, It helps businesses keep up with the deep integration of Vietnam into the global economy.