The Saigon Beer, Alcohol and Beverage Corporation (Sabeco), Vietnam’s largest brewer, plans to divest state holding to a minority 36 per cent, a source aware of the development told DEALSTREETASIA, even as the beverage producer Thursday said that nine firms had already submitted bids to buy a stake in it.
DEALSTREETASIA has earlier reported that several foreign players, including Thai Beverage Group, Singha Corporation – another Thai brewer, Japan’s Asahi Breweries, Heineken (which already holds five per cent stake in the Vietnamese state-owned beer producer) and the US-based SAB Miller, were examining potential investments in Sabeco. All these companies are likely to have submitted bids
Among the domestic investors, Duc Binh Group, Hung Thinh Diamond, Lien Viet Group, Saigon Securities Inc and Sunshine Consulting and Investment JSC are keen on acquiring a stake in Sabeco, DEALSTREETASIA has learnt. Most of these firms operate in the real estate and the financial sectors.
Accordingly, the Ministry of Industry and Trade – which represents the government ownership in Sabeco – has proposed to sell the stake either in a single tranche, worth about $1 billion, to reduce the government’s holding in it from 89.59 per cent to 36 per cent; or to sell in two batches of 40 per cent and 13.59 per cent.
The ministry seems to be in favour of the first option, reasoning that it could help Sabeco find more strategic investors, the person quoted above, who did not want to be named, added.
The Vietnamese government has valued the company at over $2 billion, and has said it is open to selling up to 53 per cent in the company to strategic investors. Sabeco has a 46 per cent market share in Vietnam, the country with the highest beer consumption per capita in ASEAN (35.5 litres per annum), as compared to just 16 per cent for Hanoi Beer Alcohol and Beverage Corporation aka Habeco, the second largest player.
Amidst these developments. the company’s chairman Phan Dang Tuat said that he would prefer Vietnamese firms becoming Sabeco’s strategic shareholders.
Speaking at Sabeco’s shareholder meeting on Thursday, Tuat said that nine companies have submitted applications to buy the Vietnamese brewer. Addressing the interest from ThaiBev, Tuat figuratively compared Sabeco to a “beautiful girl” and said that large firms such as ThaiBev were like handsome men, but the “marriage” between them will be decided by the local ministry.
“We should be cautious when working with large firms. Cooperation in the same industry can be beneficial, but the threat is that we might soon lose our brand. By all means, annexationism always exists in the business method of large companies,” he told shareholders.
Local businesses have more advantages, as the strategic investor criteria for the company, apparently requires that the partners support Sabeco in improving production capability and quality, but do not directly compete with the beer maker.
“We will host a game for qualified players, and sell to who offers the best price with the best promises for shareholders,” Tuat added.
The beverage business faced some difficulties last year due to the slump in the country, which led to a slowdown in consumption, said Sabeco general director Pham Thi Hong Hanh, who also spoke at the company’s shareholder meeting today.
She further added that concluding this fiscal year, Sabeco profit will grow by eight per cent to reach VND3.3 trillion ($153.5 million). However, Hanh also added that the possible forthcoming revision in special consumption tax might affect profit and the dividends for stakeholders.
Meanwhile, Sabeco will promote exports to the neighbouring markets of Cambodia, Laos, Myanmar, China and Korea. In addition, it will upgrade current factories while deploy investment in new plants.