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Thai Beverage unit spends $4.8bn buying 54% of Sabeco

Released at: 19:19, 18/12/2017

Thai Beverage unit spends $4.8bn buying 54% of Sabeco

Photo from baomoi.com

Local entity not subject to foreign ownership limits and picks up maximum holding of 54%.

by Quang Huy

A unit of Thai Beverage (ThaiBev) outlaid nearly VND110 trillion ($4.8 billion) on acquiring nearly 54 per cent of Vietnam’s largest brewer, the Saigon Beer Alcohol and Beverage Corporation (Sabeco), the Ministry of Industry and Trade (MoIT) announced.

More than 343.66 million Sabeco shares were sold to the unit, Vietnam Beverage, at the starting price of VND320,000 ($14.05) at the December 18 auction. The only other bidder, a Vietnamese individual, bought 20,000 shares, or 0.003 per cent, at a price of VND320,500 ($14.07) each.

Vietnam Beverage, a unit of ThaiBev, controlled by tycoon Mr. Charoen Sirivadhanabhakdi, emerged as the only institutional buyer for a majority stake as global brewing groups stayed out of the auction. The bulk of the shares were sold at a higher price than Sabeco’s market value, whose shares closed at VND309,200 ($13.6) on December 18.

The trade ministry said in a statement on December 17 that Vietnam Beverage had registered to participate in Sabeco’s auction, in which the government was selling a stake of nearly 54 per cent. In a December 17 statement to the Singapore exchange, ThaiBev said its indirect associated company had submitted the registration to participate in the bidding. “Vietnam Beverage’s bidding price will only be finalized and notified to the ministry, together with the submission of its bid, on December 18,” Singapore-listed ThaiBev said.

Sabeco’s foreign ownership is capped at 49 per cent. With 10 per cent already in foreign hands, that left only 39 per cent for overseas buyers at the December 18 auction. Local bidders such as Vietnam Beverage can bid for a majority stake of up to 54 per cent. Heineken holds a 5 per cent stake. The government’s minimum price for the 54 per cent stake on offer valued Sabeco at about 36 times core earnings, more than double the trading multiples of around 15 for some global peers.

While global companies such as Anheuser-Busch InBev NV and Asahi Group Holdings had shown interest earlier, many were put off by Sabeco’s valuation, as the stock has surged 56 per cent this year. ThaiBev paid a premium to get into Vietnam’s $6.5 billion beer market as it targets to expand across Southeast Asia to diversify revenue streams.

“While the deal could be deemed pricey, it does give ThaiBev access to a strong player” in Vietnam’s growing beer market, CIMB-GK Securities’ analysts wrote in a note before the winning bid was announced. “The acquisition is in line with the group’s Vision 2020, of being a regional beverage player.”

ThaiBev, through its Fraser and Neave Ltd. investment unit, also holds a 16 per cent stake in Vinamilk, the country’s largest dairy firm, and has registered to increase its holding. Another Mr. Sirivadhanabhakdi-owned company, TCC Holding Co., struck a deal to acquire Metro Cash & Carry Vietnam for about $700 million in 2015.

ThaiBev’s unit is registered as a local company, making it eligible to take a controlling stake as foreign ownership limits do not apply. Last month, Thai Bev purchased a 49 per cent stake in a Vietnamese food and beverage company, the Vietnam F&B Alliance Investment Joint Stock Co. Incorporated on September 27 for management consultancy and investment holding activities, which owns Vietnam Beverage.

Prime Minister Nguyen Xuan Phuc will decide whether to sell more shares of Sabeco, Mr. Truong Thanh Hoai, Head of Industry at MoIT, said at the brewer’s auction in Ho Chi Minh City.

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