M&A in Vietnam better than in regional markets

VNStockNews.com - Mergers and acquisitions (M&A) have been faring better in Vietnam than elsewhere in Southeast Asia this year despite the economic slump, according to PricewaterhouseCoopers.

The assurance, tax, legal and advisory services firm said in a review of M&A in Vietnam in the first half of the year that the number of M&A deals announced in the period grew 107% year-on-year to 112 while the figure for the entire region declined by 3% to 972.

Although the value of M&A deals in Vietnam in January-June stood at US$232 million, down 51% from the year-earlier period, it was still better than a fall of 63% for the region when its total M&A value just exceeded US$18.5 billion.

The interest in M&A in Vietnam remains high, PricewaterhouseCoopers said, and the fact that the Vietnamese business community and Government agencies have actively promoted the potential benefits of this activity as a possible solution to dealing with the local difficulties arising from the global recession.

The deals involving domestic companies in the first half were the main driver for M&A activity. The review identifies the volume of domestic deals jumped by 260% year-on-year to 72 while the foreign inbound deals leapt 18% to 40.

The value of domestic M&A deals registered for US$130 million in the first half, an increase of 18% compared to the same period last year, while the foreign inbound M&A deals fell up to 72% in value to US$102 million.

The fall in value resulted from a significant reduction in the number of M&A deals in the financial sector as impacted by the global financial turmoil. The review shows this sector made up only 17% of the total deals in the year to June compared to 30% in the prior period.

The decline also reflected the fact that many foreign firms took time to re-evaluate their expansion strategies, both in their home markets and developing economies such as Vietnam.

However, the company noted that the decline in the value of M&A deals was beneficial in terms of stimulating discussions on the difficulties with deal making in Vietnam. Domestic and foreign businesses also have opportunities to raise their issues with the relevant authorities via various consultative channels.

PricewaterhouseCoopers said confidence in Vietnam’s growth potential remained strong and that the ongoing market difficulties would create further opportunities for foreign investors and domestic companies to enter new sectors of the economy or to make opportunistic acquisitions of distressed assets.

The company said the fundamentals of making Vietnam an increasingly attractive investment destination have not changed much. “We therefore expect deal values to rebound and volumes to continue to grow once the developed economies return to growth.”

The company predicted the M&A activity among domestic companies would continue to outpace that of foreign players in view of global economic difficulties and the improving profitability of major Vietnamese corporations.