As part of it’s inorganic expansion plan, the Vietnam-based rubber major Quang Nam Rubber Investment JSC (VHG), formerly known as formerly Viet-Han Corporation has increased it’s ownership in the oldest rubber industry player of the country – the Sao Vang Rubber JSC (SRC) – to 18 per cent with an additional investment of $3.6 million.
From October to December, this year VHG has acquired shares of Sao Vang Rubber JSC (SRC) in the open market, upping its stake by more than 12 per cent (from the previously owned 5.54 per cent to 18.01 per cent). This was done as part of the shareholders’ plan to increase VHG’s footprint in the rubber industry by acquiring stakes in other companies.
Over the course of two months VHG has done 10 transactions in the open market. The largest block purchase of SRC shares (890,186 shares) took place on October 28.
Over the same period, SRC’s share price has increased by 38 per cent from VND 29,800 ($1.4) per share to VND 41,200 ($2) per share, reaching a high of VND 47,700 ($2.23) per share on November 18.
Calculations based on the closing price on each transaction day, put the amount spend by VHD (to acquire 2.3 million shares of SRC) at VND 78 billion ($3.6 million).
The 2014 General Meeting of shareholders had outlined VHG’s expansion plan for the rubber industry, which included inorganic expansion by acquiring a majority stake of 20 per cent to 35 per cent in other established companies in the same industry. The shareholders’ body had also specified plans of regarding VHG’s acquiring a controlling stake in at least two rubber companies with large rubber plantations and factories.
Established in 2003, VHG started with VND six billion ($0.28 million) charter capital and has been increased it to VND 650 billion ($30 million). In 2014, VHG reported an accumulated revenue of VND 166 billion ($7.7 million) in the first three quarters, in which VND 54 billion ($2.5 million) was the company’s after-tax-profit.
Meanwhile, SRC is Vietnam’s oldest company in the rubber industry, which founded in 1960. The company earned VND 260 billion ($12.1 million) in revenue for the first nine months of 2014, of which, VND 54 billion ($2.5 million) is profit.
Vietnam Chemical Group (Vinachem) is the controlling shareholder of SRC with 51 per cent equity stake.