US-based confectionery conglomerate Mondelez International Corp is planning to acquire a majority stake (80%) in the snack unit of Kinh Do Corporation – the Binh Duong Kinh Do Corp- through an investment of $370 million.
Subject to Kinh Do shareholders approval, Mondelez will have an opportunity to purchase the remain 20% stake in another 12 months, said a company official.
Tim Cofer, executive vice president of Mondelez (Asia Pacific and other regions), emphasised that this deal is “very important and vital” to the company as Kinh Do would provide Mondelez with a ready distribution network in Vietnam– a challenging market, which is a mix of supermarkets and local kiosks in the suburban areas. “Deep understanding of local customers, commercial environment, and complex routes to market in Vietnam, provide a strong foundation to grow the business of Mondelez” he added.
Kinh Do would have to complete the restructuring of the snack unit, which it had announced earlier, prior to the closing of this transaction (the second quarter of 2015.)
The company will merge its factories and divisions relating to snack business into one entity – Binh Duong Kinh Do Corp (excluding the Kido ice cream, dairy products and retail bakeries). Currently, the snack businesses of Kinh Do Corp generate $175 million in annual sales of popular products like AFC crackers, Mooncakes, Cosy biscuits, etc.
Chairman Tran Kim Thanh, who is the founder of Kinh Do Corporation, started it in 1993 in the Ho Chi Minh City. It is Vietnam’s largest confectionary company in terms of sales and production. Over the past 21 years, Kinh Do has established a diversified portfolio of category leading brands in products like biscuits, buns, cakes, mooncakes, ice cream, snacks, etc.
For the first six months of 2014, Kinh Do’s revenue was $41.3 million (VND 877 billion) with a net profit after tax of $4.76 million (VND 101 billion). In 2013, total income of the company was $212.3 million (VND 4.5 trillion) with $23.6 million (VND 500 billion) in net profit after tax.
Mondelez International Inc is one of the world’s largest snacks companies with a market cap of $63 billion. It owns iconic brands such as Oreo, Cadbury and Ritz crackers. In 2013, Mondelez’s revenue was $35 billion; it employs over 107,000 people and operates in 80 countries.