ICE05-Mergers & Acquisitions NEWS

Weekly issued to about 82.
000 investors, managers, and investment organizations & groups in Vietnam or overseas
Volunme ICE-05, Wednesday August 6th, 2008

ICE – the M & A and project investment connection is the source of useful information for
domestic and foreign investors, enterprise owners and corporations. M & A News issued
weekly by ICE will provide information of buying and selling enterprises in all business fields
as well as investment opportunities in projects throughout Vietnam. In addition, ICE Vietnam
M & A News will help foreign investors and enterprise owners to update new investment
policies and new information of the M&A market in Vietnam.
Main parts:
Ads here as
Part 1: Vietnam’s investment market sponsors
Part 2: Global M & A market
Part 3: Vietnam and M&A– Varieties of Mergers
Part 4: M & A opportunities
PART 1: VIETNAM’S INVESTMENT MARKET
Indian businesses look for Vietnam market info Chinese groups plan to invest in Thai
Indian businesses have expressed interest in investing in Nguyen
Vietnam for the market’s “political stability, high economic Three major corporations from China are
growth, healthy investment climate and numerous stimuli.” planning to pour around 2 billion USD into
Vietnam’s northern Thai Nguyen to turn it into an
The viewpoint was shared by a majority of executives from 50 eco-industrial city, said a local official.
Indian businesses at a workshop on trade with Vietnam held in Thai Nguyen’s Planning and Investment
Mumbai province, India, on July 29. They also said they Department Director Nguyen Duc Minh said local
wanted to be better informed of the Vietnamese economy. authorities recently signed a memorandum of
Vietnamese General Consul Nguyen Viet Hung in India’s understanding on the project with
Mumbai province pledged great assistance and favourable representatives of China ’s Shan Shan, Sun Khun
conditions for Indian businesses to make profits in Vietnam. and Honghui groups.
Trade revenues between Vietnam and India reached 1.54 The Chinese investors pledged to submit the
billion USD in 2007 against 1.02 billion USD in 2006.--Enditem project feasibility study to the province for
consideration by October at the earliest…
(Sources: VNA) (Sources:VNA)
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Page 1

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Binh Dinh looks for investors
Binh Dinh Province, part of the central key economic zone, is seeking to develop
its potential to attract investors, its leader said.
Vu Hoang Ha, chairman of the province People’s Committee, said the focus is on developing
infrastructure.
A Government zoning plant for the period until 2020 seeks to make Binh Dinh an industrial,
trade, tourism, services and human resources training hub for the south-central region and
the Central Highlands regions.
The province offers incentives to investors including assistance to promote their brand
names and distribution, Ha said. “The People’s Committee is reforming the administration and adopting a “single door’
policy for registering businesses,” he said.“The move aims to create a favourable and transparent investment
environment.” The province has drawn up a list of projects in which it is seeking investments in sectors like
agriculture, fisheries, industry, tourism, and construction, he said.
The province’s Investment Promotion Centre said with the authorities’ efforts to attract investment and Binh Dinh’s
geographical advantages, there has been a recent growth in investment. The province had attracted only three
foreign direct investment projects involving 20 million USD between 1992 and 2000. But since 2001 it has attracted a
further 28 foreign invested projects worth 352 million USD. Most of the investors are from the US , Japan , the
Republic of Korea , China , Germany and Singapore .The province has two operating industrial parks, Phu Tai and
Long Vy, and the Nhon Hoi Economic Zone. Phu Tai and Long Vy Industrial parks, which have land occupancy rates of
88 percent, house companies that have invested a total of 1.99 trillion VND (120 million USD). Nhon Hoi Economic
Zone, established in 2004 and measuring 12,000 ha, has a 545 ha free trade zone, zones for industrial, maritime,
trade, and tourism services, and urban residential areas.
By last June the People’s Committee had issued licenses to 18 domestic and foreign projects with an investment of
724 million USD in the zone. Binh Dinh province also has 19 industrial clusters with a total area of 445 ha, with 11 of
them having occupancy rates of 90-100 percent. Ha said the province would soon begin construction of the 272 ha
Nhon Hoa and 265 ha Hoa Hoi industrial parks. It is also planning to build two more industrial parks, Cat Khanh and
Cat Linh, he said. The province’s Quy Nhon deep-sea port handles nearly 4 million tonnes of cargo a year, the third
highest in the country. The province’s main export commodities are wooden furniture, agricultural and forestry
produce, minerals and seafood.
( Source: VNA)
SHORT INVESTMENT NEWS

Gov’t orders more investment in Central Record foreign investment
Head of the Government’s Central Highlands Steering Board Le Hong Anh has in Vietnam
called for further investment in socio-economic development of ethnic minority Vietnam's government says the
areas as a crucial solution for the Central Highlands development. country has received a record
Anh, who is also a Politburo member and Minister of Public Security, made the call $US45.3 billion in foreign direct
at a meeting for the region’s half-year review held in Dak Lak province on July 29. investment this year.
He made it clear that ministries and industries should work closely with the Central Taiwan topped the list of
Highlands provinces to speed up the tempo of growing additional 100,000 ha of investors, next came Japan and
rubber in the region. Malaysia.
He also urged the Ministry of Industry and Trade and the Vietnam Electricity Group From January to July, Vietnam's
to early compensate in both money and new settlements for farmers who lost land government licensed 654 new
for electricity projects as well as to speed up vocational training and job promotion projects in the industrial sector,
for rural young people, especially those from ethnic minority groups. services, and agriculture,
In the first six months of the year, the Central Highlands managed to surpass the forestry and aquaculture.
national average in GDP growth to 14.8 percent and fulfill its targets in exports, The rapid inflow of capital comes
agricultural and industrial production. The region was also recognised for progress the year after Vietnam joined
made in State budget-funded development programmes such as in poverty the World Trade Organisation.
reduction and afforestation.—Enditem
(Source: VNA) ( Source: VNA)

PART 2: GLOBAL M & A MARKET
M & A, a market full of Potential

there are 1092 projects of capital Investment Limited-British Virgin
transference with the total value of Islands, Mirae Asset Exim Investment
$16.8 billions up to December 31st Limited (of Korea’s Mirae Asset
2007. Evaluating the M&A tendency Corporation and Mirae Asset Maps
on Vietnam’s market, Mr. Phan Huu Opportunity Vietnam Equity Balanced
Thang – the director of FIA said that Fund 1.
Vietnam has a yong economy with a
high growth speed, combining Through M&A affairs pointed out,
attractive factors for the M&A market. M&A activities are taking place more
strongly than we have thought. A lot
M&A finds a lot of opportunities As said by Mr. Thang, in the of great financial figures in the world
in the crisis (Image: Illustration) development plan of 500,000 have been present in Vietnam, and
enterprises to the year 2010, it is their first move to express their
estimated that up to 35-50% of power on the market is to purchase
The inevitable consequence of Vietnam’s enterprises may merge one part, contribute capital or even
economic crises is that a number with or be merged with other purchase the whole enterprises of
of enterprises will have to face partners in 6 or 10 coming years. Vietnam. This has shown that M&A in
difficulties and bankruptcy. In Reasons are the market competition, Vietnam is really a potential market.
order to overcome difficulties, the appearance of new business
many enterprises will have to be opportunities, demand for business Economic difficulties and
restructured, which is the expansion or investment orientation opportunities for M&A
opportunity for the M & A market change or simply appealing proposes
to develop. from buyers. Mr. Thang In an M&A-specialized seminar, M&A
emphasized,“In coming years, M&A is predicted to occur very actively in
A market full of potential activities will develop strongly and the next period of time with many
influence deeply business methods, “giant” M&A affairs.
In the past two years, M & A making important contribution
activities in Vietnam have been really torestructure Vietnam’s economy”. According to experts of Foreign
hot, becoming a topic of current
Investment Agency and An Binh
interest of the financial market. In early months of the year 2008, securities, this can be explained
Statistics have shown that in 2005 despite the difficult financial situation based on the fact that the hot
there were 18 M & A affairs, the total and the gloomy capital market, M&A economic growth in the past period
value of which was $ 61 millions, and has not been stopped. Preliminary of time has “created” too many
in 2006, there were 32 ones, the total information shows that since the companies operating in industries of
value of which was $ 245 millions. beginning of 2008, M&A activities high competitiveness such as
However, only in the first six months have taken place very strongly, accountancy & audit, bank finance,
of the year 2007, the number of M & represented through some business securities, etc. However, when the
A affairs has increased to 46 with the affairs. For example, Indochina economy falls into the adjustment
total value of $ 626 millions (twice as Capital Vietnam Holding bought 20% period, the “competition to the
much as that of the year 2006 and 15 shares of Ninomaxx, Goldman Sachs bottom” is a visible future. In order to
times as much as that of the Corporation invested in 30% shares avoid this case, companies are likely
corresponding period of the year of Diana joint-stock company, or the to co-operate with each other to
governor of the State Bank of survive and develop, which helps to
Another aspect of M&A is project Vietnam allowed Eximbank to sell promote effects of the economic
transference, which is taking place 25% of its charter capital to 4 foreign efficiency.
very actively. According to the investors, including Sumitomo Mitsui
Foreign Investment Agency (FIA) of Banking Corporation (SMBC), VOF
Ministry of Planning and Investment,
Another reason is that foreign affecting heavily operation of capacity, especially foreign
investors highly appreciate companies of related service enterprises who want to promote
business, some units with small their presence in Vietnam. This
investment opportunities in Vietnam charter capital and weak tendency will become more and more
as well as commitments of Vietnam’s administrative capacity judged by fruitful in the next period of time if
government on the process to enter analysts to hardly overcome the the legal corridor is improved more.
into WTO so that the foreign currently difficult period have been Obviously, on the contrary, it cannot
investment capital poured into looking for buying partners. The but mention development
Vietnam will continue to increase purchasing demand of investors also opportunities of units after self-
strongly. One of the methods foreign has gradually been appearing. Mr. selling.
investors use to occupy and know Nguyen Quoc Toan - the CEO of TNK
about Vietnam’s market more deeply Capital, specialized in M&A advisory
is through Vietnamese partners, services and restructuring, said with (Source: Phuoc Ha)
which even can creates more impetus securities companies, it is not easy to
for M&A activities. sell one in the current context.
However, Mr. Toan has also agreed
Meanwhile, as viewed by Vo Dai that this is a good time to repurchase
Luoc, a leading economic expert, securities companies.
inflation prevention has to accept any
penalties. The fact that there will be Therefore, according to M&A experts,
many enterprises facing difficulties, due to the difficult economy, the
bankruptcy, mergers and down stock market and the fact that
acquisitions, etc. is obviously many enterprises lack capital to
considered a normal thing. develop their production and
business, some business units have
In fact, experiencing the period in to consider external support. This is
which the stock market was down, the gold opportunity for strong
enterprises with sufficient financial
Top Global M&A Deals
Value
Target Acquirer
$M
Genentech Inc (USA) Roche Holding AG (CHE) 43,655.4
LS Power Equity Partners and Global
TransAlta Corp (CAN) 7,015.6
Infrastructure Partners (USA)
Tokio Marine & Nichido Fire Insurance Co
Philadelphia Consolidated Holding Corp (USA) 4,392.7
Ltd (JPN)
Brocade Communications Systems Inc
Foundry Networks Inc (USA) 2,807.9
(USA)
FoodVest Ltd (GBR) Lion Capital LLP (GBR) 2,190.5
North American laundry business of Unilever NV (USA) Vestar Capital Partners Inc (USA) 1,450.0
Properties in Eastern and San Juan Regions and Marcellus
XTO Energy Inc (USA) 1,300.0
Fayetteville Barnett and Haynesville Shales (USA)
Bertolli olive oil and vinegar business (ITA) Sos Cuetara SA (ESP) 998.4
Vital Signs Inc (USA) General Electric Co (USA) 990.4
Aurelian Resources Inc (CAN) Kinross Gold Corp (CAN) 915.8
(Source: Reuters)

PART 3: VIETNAM AND M & A- VARIETIES OF MERGERS
Vietnam an attractive M&A market
of Malaysia’s banks, purchased 15% they may seek foreign capital

of stakes of An Binh bank in March sources.
2008. Additionally, Carlsberg became In the short term, PwC thinks that
the strategic partner of Habeco when M&As in securities firms will become
it purchased 16% of Habeco stakes in more popular. The companies are
May 2008. facing a lot of difficulties due to the
According to PwC the value of the falling stock market.
affairs made in the first half of the A lot of general corporations have set
year was lower than in the first half up securities companies, and now,
of 2007, but there was one more this facing a lot of difficulties, they have
year than last year (in H1 2007, there to focus on their main business fields
were 47 M&A cases worth $736mil). and may have to sell their securities
VietNamNet Bridge – Despite current Though the value of M&A cases this companies to rivals or foreign
macroeconomic difficulties, Vietnam year is lower than last year, PwC’s investors.
remains an attractive merger and experts believe that it is too early to Meanwhile, foreign investors really
acquisition (M&A) market. According conclude that M&A activities are want to jump into some business
to the PricewaterhouseCoopers’s declining. fields like equitised
report released on July 29, there Explaining this, PwC said that some telecommunications companies and
were 48 M&A cases in Vietnam in the affairs have been delayed due to the retail and distribution sector
first half of the year, worth $347mil. macroeconomic uncertainties, or when the country opens the market
PwC cited some outstanding M&A because parties have wanted to re- in 2009.
cases: Swiss Re purchased 25% of negotiate prices. Meanwhile, one or Construction materials also prove to
stakes of Vinare (Vietnam Re- two big affairs would have changed be an investment field foreign
insurance Corporation) in January the figures. investors are interested in.
2008, worth $81.9mil; Kamaz Inc, PwC’s report about M&A is carried PwC believes that with the
Russian automobile manufacturer, out every six months. The figures implementation of its WTO
purchased 12.5% of stakes of VMIC released by PwC showed that the commitments, Vietnam will become
in February 2008 (the Russian value of the M&A cases in H2 2007 an attractive destination for M&A
partner plans to raise the ownership was $1.132mil, or nearly double that activities in 2008 and coming years.
ratio to 36%); Morgan Stanley in H1. Therefore, PwC’s experts have Moreover, the loosening of the
purchased 48.33% of stakes of every reason to believe that the value regulations on foreign labourers in
Huong Viet Securities Company. of M&A cases will increase Vietnam will also serve as an
Another noteworthy affair in February considerably in H2 2008. important factor that pushes up M&A
2008 was that Franklin Resources Inc PwC believes that there will be more activities in Vietnam.
purchased 49% of stakes of M&A cases in the last six months of
Vietcombank’s fund management the year as some small financial (Source: TBKTVN)
company. Berhard, one of the biggest institutions now face difficulties and

Varieties of Mergers
From the perspective of business structures, there is a whole host of different mergers. Here are a few types,
distinguished by the relationship between the two companies that are merging:
Horizontal merger - Two companies that are in direct competition and share the same product lines and markets.
Vertical merger - A customer and company or a supplier and company. Think of a cone supplier merging with an
ice cream maker.
Market-extension merger - Two companies that sell the same products in different markets.
Product-extension merger - Two companies selling different but related products in the same market.
Conglomeration - Two companies that have no common business areas.
There are two types of mergers that are distinguished by how the merger is financed. Each has certain
implications for the companies involved and for investors:
Purchase Mergers - As the name suggests, this kind of merger occurs when one company purchases another.
The purchase is made with cash or through the issue of some kind of debt instrument; the sale is taxable.
Acquiring companies often prefer this type of merger because it can provide them with a tax benefit. Acquired
assets can be written-up to the actual purchase price, and the difference between the book value and
the purchase price of the assets can depreciate annually, reducing taxes payable by the acquiring company. We
will discuss this further in part four of this tutorial.
Consolidation Mergers - With this merger, a brand new company is formed and both companies are bought and
combined under the new entity. The tax terms are the same as those of a purchase merger.
( Source: ICE Collection)

PART 4: M & A OPPORTUNITIES
M&A-21: Selling a company operating in office facilities
Cau Giay - Hanoi

Location
Office facility business, etc.
Business fields
+ Operating for 5 years in Hanoi
+ Available stable quantity of customers, good
facilities and qualified staffs
Current status
+ Sufficient legal document
+ Total asset value: >200 mill.
Transparent and sufficient tax reports

Financial status
Reasons for selling Business orientation change
$14,8 90.00 (excluding accounts receivable,
Selling price accounts payable and inventories)
ICE’s comment
M&A-22: Selling an enterprise of informatics equipment business
Location Ha Nam
Computers, computer components and all

Business fields
computer-related services in Ha Nam
Current status & features + 2-year-operation
+ Stable quantity of customers
+ Sufficient legal documents:
+ Office-leasing time remaining 2 years
Financial status + Profits: $1,790.00 – $2,978.00./month
+ Transparent tax reports
+ No tax debts
Reasons for selling Business orientation change
Selling price $23,810.00(including products, documents,

etc.)
ICE’s comment

M&A-23: Calling for joint-venture co-operation or capital granting
for a Resort construction project in Ha Tinh
Location Ha Tinh
Necessity of investment Current lack of high-class resorts in North

Central region to attract tourists from 2
other regions and from Lao-Thailand
(Route No 8)
Objectives of the project The project target is to become a high-

developer class spa and resort with villas hotels and
entertainment centers reaching the
highest standards in the North Central
Region (more than Cua Lo, Sam Son and
Thuan An). We are looking for investors
with good financial capacity to co-operate
with directly or transfer the whole project.
Project legal documents Available approved detailed plan.

Sufficient provincial decisions and
construction permits. Available land use
right certificate. Be about to have land-
granting decision.
Current project status In the process of constructing the

infrastructure: drains, eco-tourism canals,
local roads, etc
Land use period 50 years
Land area 53.4 ha
Total investment $31,607,142.00
Capital of the project $1,190,600.00(excluding land use right

developer value)
Total capital invested into the $297,620.00

project (up till now):
Estimated capital mobilized $30,416,666.00

by investment invitation or
capital loan
ICE’s comment

M&A-24: Selling a company operating in Construction – Construction materials
Location Hai Duong
Business fields Construction – Construction-related fields
Current status & + Manufacturing pavement block bricks and

features implementation of construction and traffic
inside and outside the province; Selling and
transferring technologies of producing PVC
doors, strengthening steel-core doors;
Supplying door materials throughout the
countries; machine-transferring consultancy for
projects, etc.
+ Available experience in this industry, the
company owner can help partners to develop
more their business.
Reasons for selling Excessive debts (some are hard to withdraw).
Selling price Negotiable (including facilities, workshops and

machines)
ICE’s comment
M&A-25: Selling a Garment company
Location Ho Chi Minh city

Business fields Garment, mainly made of jean, kaki used for
export.
Current status & + Land area: 5.000m2, Construction area:

features 2.200m2
+ Workshop area: 1600m2, Office area:
320m2
+ Facilities: 200 sewing-machines
+ Number of employees: 120
+ Available stable quantity of customers
Reasons for selling No managers
Selling price $1,309,523.00 (including facilities,

workshops, machines and customers)
ICE’s comment


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Weekly issued to about 82.

Volunme ICE-05, Wednesday August 6th, 2008

PART 1: VIETNAM’S INVESTMENT MARKET

SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Page 1

SHORT INVESTMENT NEWS

SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Page 2

M & A, a market full of Potential

Top Global M&A Deals

SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Page 4

Vietnam an attractive M&A market

of Malaysia’s banks, purchased 15% they may seek foreign capital

SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Page 5

Conglomeration - Two companies that have no common business areas.

( Source: ICE Collection)

SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Page 6

M&A-21: Selling a company operating in office facilities

Cau Giay - Hanoi

Transparent and sufficient tax reports

M&A-22: Selling an enterprise of informatics equipment business

Computers, computer components and all

Reasons for selling Business orientation change

Selling price $23,810.00(including products, documents,

SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Page 7

Necessity of investment Current lack of high-class resorts in North

Objectives of the project The project target is to become a high-

Project legal documents Available approved detailed plan.

Current project status In the process of constructing the

Land use period 50 years

Land area 53.4 ha

Total investment $31,607,142.00

Capital of the project $1,190,600.00(excluding land use right

Total capital invested into the $297,620.00

Estimated capital mobilized $30,416,666.00

SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Page 8

Location Hai Duong

Business fields Construction – Construction-related fields

Current status & + Manufacturing pavement block bricks and

Reasons for selling Excessive debts (some are hard to withdraw).

Selling price Negotiable (including facilities, workshops and

M&A-25: Selling a Garment company

Location Ho Chi Minh city

Current status & + Land area: 5.000m2, Construction area:

Reasons for selling No managers

Selling price $1,309,523.00 (including facilities,

SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Page 9

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