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Two Thai companies eye Sabeco stake

Released at: 16:06, 05/02/2015

Two Thai companies eye Sabeco stake

Both express interest in securing part of Vietnam's largest beverage concern.

by Lam Anh

Thai Beverage (ThaiBev), which has the Chang beer and Oishi green tea brands in its stable and is owned by Thai billionaire Charoen Sirivadhanabhakdi, and Singha Corp., which has Shingha beer, are both looking to buy a stake in the Saigon Beer Alcohol Beverage Corp. (Sabeco), with any deal set to cost ThaiBev nearly $1 billion.

ThaiBev wants to buy 40 per cent of Sabeco and has offered to pay as much as VND80,000 ($3.76) a share, a premium of about 60 per cent on its over-the-counter price, the Wall Street Journal reported a senior official in the Ministry of Industry and Trade as saying. This price puts Sabeco's value at roughly $2.4 billion. The government currently owns 89 per cent of the company. According to market research firm Euromonitor, Sabeco controlled 46 per cent of Vietnam's beer market as at 2013. The official also said that Singha Corp. has expressed interest in buying a stake in Sabeco but provided no further details on what price it may offer. According to Sabeco's Chairman Phan Dang Tuat, any plans to sell the government's stake would be up to the State, adding that if ThaiBev bought a 40 per cent stake it would breach existing foreign investor limits of 25 per cent on State assets.

Vietnam is now an attractive market for foreign investors due to the growth prospects in its beer market. Euromonitor data shows that beer volume in Thailand was estimated at 1.93 billion liters last year, down from 1.97 billion liters in 2013. In Vietnam, volumes increased 8 per cent last year to 3.2 billion, according to the Ministry of Industry and Trade. Euromonitor forecast that beer volumes in Vietnam would grow 9 per cent this year, to 3.88 billion, while it expects Thai volumes to fall to 1.89 billion liters this year.

The Vietnamese Government had previously planned to sell its stake in Sabeco to strategic foreign investors, but this was delayed because of procedural issues, such as the number of shares to be sold by the government. Recently, though, the government has moved to hasten its reform of State-owned enterprises, which may open the way for any deal to proceed.

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