Earlier, on Dec 18, ThaiBev’s associated company Vietnam Beverage Co. Ltd. submitted an auction bid for 343,642,587 shares (approximately 53.59% of all outstanding ordinary shares in Sabeco) for 320,000 Vietnamese đồng per share. The estimated value is đ109,965.6b (about US$4.8b).
The only other bidder was an individual domestic investor who bid for 20,000 shares — less than a 1% stake.
Privatise and divest
Sabeco was owned by Vietnam’s Ministry of Industry and Trade. The sale is part of the Government’s strategy to raise funds by “equitising” various state-owned enterprises.
At the auction, the head of industry at the Ministry, Truong Thanh Hoai, said that Prime Minister Nguyen Xuan Phuc will decide whether to sell more shares of Sabeco.
While Sabeco’s foreign ownership is capped at a maximum of 49%, ThaiBev’s Vietnam Beverage is registered as a local company, allowing it to own a controlling stake.
Other beer giants such as Anheuser-Busch InBev, Kirin Holdings and Asahi Group Holdings were previously reported to be interested but stayed away in the end, possibly put off by Sabeco’s valuation and high share price — announced at a minimum of US$14.10 per share.
Reasons for the high-priced acquisition
While the acquisition undoubtedly came at a high price, it allows ThaiBev to expand in an important regional market for the Group’s products. Vietnam is reportedly the largest beer market in Asean and the third-largest in Asia after China and Japan, worth about US$6.5b.
With Sabeco, ThaiBev now also has immediate access to an extensive local distribution network.
“The acquisition will help the company to have immediate access to extensive local distribution networks and will immediately diversify geographically as well as give us exposure to one of the strongest growth countries in Southeast Asian market with young population,” said the Group in a statement.
“Sabeco has the largest market share in Vietnam's beer sector and is amongst the leading beer companies in Vietnam and Asean,” it added.
Of course, the Group has also increased its product offering with Sabeco’s Saigon Beer and 333 Beer now added to its portfolio.
These factors complement ThaiBev’s vision to solidify its position as the largest beverage company in Southeast Asia by 2020.
It is also significant to note that the acquisition adds to the growing beverage and property empire of Thai billionaire Charoen Sirivadhanabhakdi. Apart from ThaiBev, other big assets include TCC Land and Fraser & Neave, through which he has almost a 20% stake in Vietnam’s Vinamilk.