Thai Beverage is poised to take a majority stake in Saigon Beer Alcohol Beverage Corp. valued at $4.8 billion, after an auction for Vietnam’s larger brewer attracted no other major bidders.
Vietnam Beverage, ThaiBev’s domestic unit, registered to bid for 343.662 million shares, or a 53.59% stake, in Sabeco (as Vietnam’s largest brewer is known), said Vietnam’s Ministry of Industry and Trade.
An undisclosed individual domestic investor registered to bid for 20,000 shares. In all, the ministry garnered bids for about 343.682 million shares in Sabeco.
Investors bidding on less than 25% of the company’s shares had until Sunday to register for an auction of shares in Sabeco that was to be held on 18 December.
Billionaire Charoen Sirivadhanabhakdi-controlled Thai Beverage’s unit was the only company that registered by 11 December, the last date for investors seeking more than a 25% stake.
Sabeco shares jumped as much as 2.8%, to 317,900 dong, in early trading in Vietnam on Monday. Trading in Thai Beverage shares was halted in Singapore.
Growth Potential
While half a dozen global companies including Anheuser-Busch InBev NV and Asahi Group Holdings had shown an interest earlier, they may have been put off by Sabeco’s valuation, as the stock has surged 59% this year.
The lacklustre interest could weigh on the government’s programme to attract investors to stakes in other state-owned companies, as Vietnam pushes ahead with economic reforms to boost growth, said Le Net, head of LNT & Partners Law Firm in Ho Chi Minh City.
“It’s not just that the price is very high, but also the short timing of the process made it impossible for investors to do due diligence to justify the deal with their boards,” Net said.
ThaiBev said that it has confidence in the “growth potential of the Vietnam market and has genuine interest in exploring investment opportunities in the country”.
An expanding middle class and youthful population helped drive a 300% surge in beer demand since 2002, according to Euromonitor International, which estimates that the market was worth 147.2 trillion dong ($6.5 billion) in 2016.
“ThaiBev strongly believes in the long-term growth prospects of the Vietnamese beer market,” said Tyler Cheung, director of institutional clients at ACB Securities JSC.
“The opportunity to become a meaningful player in a market expected to reach just under five billion litres of consumption by 2020 was just too attractive to pass up, even when considering the relatively high price of the offering,” Cheung continued.
ThaiBev’s unit is registered as a local company, making it eligible to take a controlling stake, as foreign-ownership limits do not apply to it, the ministry said. The 54% stake in Sabeco would be worth about $4.8 billion, based on the government’s initial price guidance of 320,000 dong ($14.09) a share.
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