Vietnam’s economic landscape is experiencing rapid evolution, and Mergers and Acquisitions (M&A) are at the forefront of shaping its dynamic business environment. As international investors set their sights on Vietnam’s growth potential, having a comprehensive understanding of the intricacies of M&A processes and legal frameworks becomes paramount.
In this article, we delve deep into the vibrant world of M&A activities in Vietnam, exploring key processes and illuminating case studies that exemplify the energy and potential of its economy. Get ready to immerse yourself in the exciting world of Vietnam’s M&A scene!
M&A Activities and Trends in Vietnam
Vietnam is one of the fastest-growing economies in Southeast Asia, with a GDP growth rate of 6.8% in 2021 and a population of over 97 million people. The country has also attracted significant foreign investment, especially from Japan, South Korea, China, and the US.
Historical growth of M&A activities (2007-2021)
The M&A market in Vietnam can be divided into four phases: emergence (1996-2004), boom (2005-2013), slowdown (2014-2019), and recovery (2020-2021).
The following table summarizes the number and value of deals by year for each phase:
| Phase | Number of deals | Average deal size | Total deal value |
| Emergence (1996-2004) | <10 per year | <$5 million | <$100 million |
| Boom (2005-2013) | Over 150 per year | $10 million | $2.5 billion |
| Slowdown (2014-2019) | Over 100 per year | $20 million | $1.8 billion |
| Recovery (2020-2021) | Over 100 per year | $30 million | $3.5 billion |
As can be seen from the table, the M&A market in Vietnam experienced a significant increase in both number and value of deals from 2005 to 2013, driven by market liberalization, economic growth, and foreign investment.
However, the market witnessed a sharp decline in both indicators from 2014 to 2019, due to the impact of the global financial crisis, political instability, and regulatory uncertainty. The market rebounded strongly in 2020 and 2021, thanks to the easing of border restrictions, the acceleration of vaccination programs, and the improvement of business confidence.
Notable Deals and Foreign Investment Trends
The M&A market in Vietnam has witnessed several notable deals that highlight the country’s growing prominence in the global business landscape. Here are some of the remarkable transactions that have taken place:
- In March 2022, VinFast and Ford Motor Company signed a memorandum of understanding to establish a joint venture focused on electric vehicle production. This partnership reflects Vietnam’s commitment to sustainable transportation and technological innovation.
- In April 2022, Masan Group acquired a majority stake in Vinhomes Smart City Corporation for a staggering $2.8 billion. This strategic move demonstrates Masan Group’s ambition to expand its presence in the real estate sector and capitalize on the growing demand for smart city developments.
- Vietjet Air made headlines in May 2022 by acquiring a stake in Vietravel Joint Stock Company for $300 million. This strategic investment allows Vietjet Air to broaden its portfolio and strengthen its position in the tourism and hospitality industry.
- FPT Corporation, a leading technology company, made a significant move in June 2022 by acquiring a stake in FPT Telecom Joint Stock Company for $500 million. This acquisition reinforces FPT Corporation’s commitment to bolstering its telecommunications capabilities and expanding its service offerings.
- In July 2022, VNG Corporation acquired a stake in VNG Retail Joint Stock Company for $300 million. This investment showcases VNG Corporation’s dedication to diversifying its business interests and tapping into the potential of Vietnam’s retail sector.
- Samsung Electronics Co., Ltd. made waves in January 2023 by acquiring a 20% stake in Vingroup Joint Stock Company for a staggering $4 billion. This strategic partnership between one of the world’s leading electronics companies and Vietnam’s largest conglomerate signifies the country’s attractiveness as an investment destination.
- In February 2023, Alibaba Group Holding Limited and Baring Private Equity Asia increased their stake in CrownX Corporation to 10% for $800 million. This vote of confidence from two renowned global players underscores CrownX Corporation’s growth potential in the e-commerce and retail sectors.
- Toyota Motor Corporation and Honda Motor Company formed a strategic alliance with VinFast in March 2023 to develop and produce hybrid and electric vehicles in Vietnam. This collaboration between automotive giants and a homegrown Vietnamese company cements Vietnam’s emergence as a key player in the electric vehicle market.
- In April 2023, General Electric Company and Honeywell International Inc. invested $1 billion in Viettel Group to support the expansion of its renewable energy and smart city projects. This significant investment demonstrates the growing interest in Vietnam’s sustainable development initiatives.
- Mitsui & Co., Ltd. and KDDI Corporation made a notable move in May 2023 by acquiring a 30% stake in FPT Corporation for $1.5 billion. This partnership underscores the confidence in FPT Corporation’s growth potential and its position as a leading technology company in Vietnam.
These deals exemplify the growing interest and confidence in Vietnam’s business environment, showcasing the country’s potential for investment and growth. As Vietnam continues to attract attention from global investors, the M&A landscape is expected to remain vibrant and dynamic, setting the stage for further transformative transactions and opportunities.
Legal Framework and Types of M&A Transactions in Vietnam
Mergers and acquisitions (M&A) transactions in Vietnam are subject to various laws and regulations, depending on the types of enterprises and transaction structures involved. This section will provide an overview of the main types of enterprises and transaction structures in M&A, as well as the regulatory laws governing M&A in Vietnam.
The most common types of enterprises in Vietnam are joint stock companies (JSCs) and limited liability companies (LLCs), which can be either 100% foreign-owned or joint ventures between foreign and local investors. JSCs are required to have at least three shareholders, while LLCs can have one or more members. Both types of enterprises can be publicly listed or unlisted.
The most common transaction structures in M&A are share or capital contribution purchases, asset purchases, and mergers. Share or capital contribution purchases involve the transfer of ownership of shares in a JSC or capital contribution in an LLC from the seller to the buyer. Asset purchases involve the transfer of ownership of specific assets or business lines from the seller to the buyer. Mergers involve the consolidation of two or more enterprises into one, by transferring all assets, rights, obligations, and interests to the surviving enterprise and terminating the existence of the merged enterprises.
The main laws and regulations governing M&A in Vietnam are:
- The Civil Code 2015, which provides the general principles and rules for civil transactions, contracts, and obligations;
- The Law on Enterprises 2020, which regulates the establishment, organization, operation, and dissolution of enterprises, as well as the rights and obligations of shareholders and members;
- The Law on Investment 2020, which regulates the conditions, procedures, and incentives for domestic and foreign investment activities, as well as the protection of investors’ rights and interests;
- The Law on Securities 2019, which regulates the issuance, offering, trading, and disclosure of securities, as well as the public tender offer, share repurchase, and registration and cancellation of public companies;
- The Law on Competition 2018, which regulates the prevention and control of anti-competitive practices, such as economic concentration, abuse of dominant position, and unfair competition;
- The relevant sector-specific laws and regulations, such as the Law on Banking, the Law on Insurance Business, the Law on Telecommunications, the Law on Electricity, etc., which may impose additional requirements or restrictions on M&A transactions in certain industries;
- The relevant international treaties and agreements to which Vietnam is a party, such as the WTO, the ASEAN Comprehensive Investment Agreement, the ASEAN Framework Agreement on Services, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the EU-Vietnam Free Trade Agreement, etc., which may grant preferential treatment or protection to investors from certain countries.
Case Studies of Mergers and Acquisitions in Vietnam
Vietnam’s M&A market has witnessed several significant deals in recent years, reflecting the attractiveness and potential of the country’s economy and sectors.
VinFast and Ford Motor Company
March 2021 witnessed an exciting collaboration as VinFast, the leading automaker in Vietnam, joined forces with Ford Motor Company, one of the world’s largest car manufacturers. Their shared vision led to the establishment of a joint venture focused on electric vehicle production.
By combining VinFast’s deep understanding of the local market with Ford’s global expertise and advanced technology, the partnership aims to manufacture and distribute electric vehicles in Vietnam and Southeast Asia. This strategic move not only enhances VinFast’s competitiveness and fosters innovation in the electric vehicle market but also strengthens Ford’s footprint and growth in the region.
Furthermore, this collaboration signifies a significant step towards developing Vietnam’s automotive industry and promoting environmentally friendly and sustainable transportation solutions.
Masan Group and Vinhomes Smart City Corporation
In a momentous deal that took place in April 2021, Masan Group, one of Vietnam’s largest conglomerates, acquired a majority stake worth an impressive $2.8 billion in Vinhomes Smart City Corporation, a subsidiary of Vingroup, Vietnam’s largest private company.
This strategic acquisition forms a crucial part of Masan Group’s ambitious plan to evolve into a consumer and retail powerhouse, capitalizing on the surging urbanization and digitalization trends within Vietnam. The synergy between Masan’s consumer and retail businesses and Vinhomes’ real estate and smart city projects is expected to create immense value for shareholders and customers alike.
Moreover, this landmark deal is set to enhance the competitiveness and diversification of Vietnam’s consumer and real estate sectors, further bolstering the country’s economic growth.
Vietjet Air and Vietravel Joint Stock Company
In a notable transaction in May 2021, Vietjet Air, Vietnam’s leading low-cost carrier, successfully acquired a significant stake worth $300 million in Vietravel Joint Stock Company, one of the nation’s prominent travel agencies.
This strategic investment aligns with Vietjet’s growth strategy, aiming to diversify its revenue sources and expand its comprehensive ecosystem of travel and aviation services. By capitalizing on the gradual recovery of the tourism and aviation sectors in the post-pandemic era, Vietjet Air anticipates unlocking opportunities for cross-selling and bundling of products and services between themselves and Vietravel. This integration will undoubtedly enhance the overall customer experience and satisfaction.
Moreover, the successful acquisition is expected to contribute to the growth and development of Vietnam’s tourism and aviation sectors, propelling the country’s position as an attractive destination for travelers and investors alike.
Samsung Electronics and Vingroup
In a groundbreaking deal that took place in January 2023, Samsung Electronics Co., Ltd. acquired a significant 20% stake in Vingroup Joint Stock Company for a staggering $4 billion.
This strategic move aligns with Samsung’s overarching strategy to strengthen its foothold in the Vietnamese market and diversify its business portfolio. The acquisition is projected to unlock synergies between Samsung’s cutting-edge electronics and smart devices and Vingroup’s well-established real estate and retail businesses.
Moreover, this strategic partnership is poised to foster the development of Vietnam’s high-tech industry and innovation ecosystem, contributing to the country’s technological advancement.
Toyota Motor and Honda Motor and VinFast
March 2023 witnessed a momentous collaboration as Toyota Motor Corporation and Honda Motor Company forged a strategic alliance with VinFast, Vietnam’s homegrown automotive manufacturer.
This alliance marks a significant milestone in the development and production of hybrid and electric vehicles in Vietnam and beyond. By leveraging Toyota’s and Honda’s global expertise, advanced technology, and established reputation, alongside VinFast’s intimate knowledge of the local market and robust production capacity, the alliance aims to introduce affordable and environmentally friendly vehicles to Vietnam and the wider region.
This strategic collaboration not only enhances VinFast’s competitive edge and fosters innovation in the automotive market but also promotes the adoption of green and sustainable transportation solutions in Vietnam.
Conclusion
As Vietnam’s economic landscape continues to attract global attention, the M&A sector is burgeoning with opportunities and complexities. Navigating this dynamic terrain requires nuanced understanding and adept handling.
Corporate Counsels stands out as a beacon of expertise in this sector, offering comprehensive legal services that encompass every facet of Mergers and Acquisitions. Our team of seasoned experts ensures that from initial due diligence to the final stages of deal closure, every step is marked by precision and tailored strategy.
With a commitment to excellence and a deep understanding of Vietnam’s unique business environment, Corporate Counsels is your ideal partner in unlocking the potential of M&A activities.
Visit us at Corporate Counsels to learn more about how we can assist your business in making informed decisions and achieving sustainable growth through strategic mergers and acquisitions.
Give us a call at (+84 28) 36 22 77 28, or write to us at letran@corporatecounsels.vn.
We look forward to hearing from you and working with you.
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