The world’s largest brewers from Europe to Asia are lining up for a chance to buy a stake in Vietnam’s top beer-maker, in a deal worth at least $1.8 billion, as consumption in the South-East Asian country surges.
Dutch brewer Heineken NV, Anheuser-Busch InBev NV, and its merger partner, SABMiller Plc – as well as Japan’s Asahi Group Holdings Ltd and Kirin Holdings Co. – are among seven foreign companies that have registered to bid for stakes in Saigon Beer Alcohol Beverage Corp., also known as Sabeco, said its chief executive officer, Le Hong Xanh.
“Sabeco doesn’t care if the buyer is an international or domestic company,” Xanh said in an interview at the company’s Ho Chi Minh City headquarters. “All we care about is who will pay the most. The government wants to sell its stakes as soon as possible.”
The deal is garnering interest from foreign beer brands attracted by Vietnam’s young population and rising middle class in one of the world’s fastest-growing economies. Its government is divesting stakes in its two market-leading brewers as a growing budget deficit forces the leadership to accelerate a plan to reduce holdings in state-owned firms.
Thailand’s Singha Asia Holding Pte and Thai Beverage Pcl have also signed up to take part in the Sabeco auction, while Vietnamese brokerage Saigon Securities, Inc. has joined the latest list of local potential buyers, said Xanh. That line-up is not permanent, and companies could drop out or more could join the list, he said.
Asahi “is interested in acquiring Sabeco”, its Tokyo-based spokesman Takuo Soga said by telephone. Kirin and Heineken declined to comment. Spokespersons for AB InBev, Saigon Securities, Thai Beverage and Singha-owner Boon Rawd Brewery Co. weren’t immediately available for comment.
Share Listing
On 31 August, the Ministry of Industry and Trade announced the government’s plan to sell its entire 89.59% stake in Sabeco, which it has valued at $1.8 billion, and its 82% holding in Hanoi Beer Alcohol Beverage Corp. for $404 million. Sabeco will be sold in two tranches, in 2016 and 2017, while Hanoi Beer, or Habeco, will be divested this year, it said.
Some of the government’s stake in Sabeco will be listed on the Ho Chi Minh City Stock Exchange in as soon as 45 to 60 days, Xanh said. After that, the government will auction 53.59% in the company within the year, and the remainder in 2017, he said. The proportion to be offered publicly will be decided by the ministry, Xanh added.
Pooled Bids
Prime Minister Nguyen Xuan Phuc, who said on 29 August that Sabeco and Habeco must be publicly listed before the state divests them, will need to approve the entire process, Xanh said. The government wants the market to determine the price of stakes in Sabeco, and its listing will be overseen by Maybank Kim Eng Securities Thailand Pcl, he said.
Sabeco, brewer of Saigon Beer and 333 Beer, prefers to have several major shareholders, and its auction could attract more domestic companies, some of which could form joint ventures to pool resources for their bids, Xanh said. He declined to name other interested local parties.
Beer Fans
In the case of Habeco, Danish brewer Carlsberg A/S has been awaiting the government’s permission to raise its 17% stake to 30% in the smaller state brewer, based in the capital Hanoi, in Vietnam’s north.
Foreign brewers are raising their stakes in Vietnam as beer consumption jumped approximately 40% in 2015 from 2010, according to the Vietnam Beer Alcohol Beverage Association. Locals are expected to consume more than 4.04 billion litres of beer this year, the most in South-East Asia and up from 3.88 billion litres in 2015, according to Euromonitor International.
“Vietnamese like to get together, and whenever they do, beer is a must to drink,” Xanh said. Sabeco expects its 2016 net income to rise 10%, double its target for the year, and faster than the 7% rise to 1.97 trillion dong ($88 million) posted in the first half, he said.
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