GTN Foods rejects Vinamilk acquisition bid

The board of GTN Foods passed a resolution turning down the public offer made by Vinamilk, Vietnam’s largest dairy company. It would have increased Vinamilk’s stake in GTNFoods from 2.32 percent to 49 percent. 

The offer was for 116.7 million shares at VND13,000 (56 cents) per share for a total value of VND1.5 trillion ($64.5 million).

At the meeting March 23, the board was evenly split with three directors each supporting and opposing the Vinamilk bid. But the chairman Ta Van Quyen had the casting vote and he voted against the offer. 

In a report filed to the State Securities Commission, the company explained that Vinamilk is a direct competitor of Moc Chau Milk, one of its main subsidiaries.

The acquisition and resulting 49 percent stake would have made Vinamilk a principal shareholder. GTN indirectly owns 51 percent of Moc Chau Milk through its subsidiary the Vietnam Livestock Corporation (Vilico).

Besides, Vinamilk had only registered its public offer but had not written to GTNFoods about the plan, direction or strategy to contribute to the development of the company, it said. "They have not given us sufficient grounds to agree to the public offer."

Moc Chau has the biggest dairy farm in the north, and in recent years has been a major revenue earner for GTN.

Vinamilk has a 58 percent share of the dairy market and Moc Chau, around 2.7 percent, according to international consumer statistics firm Kantar Worldpanel.  

Vietnam’s dairy industry reported revenues of more than VND100 trillion ($4.4 billion) in 2017, with Vinamilk commanding more than a 50 percent market share.

According to a report by the EU-Vietnam Business Network, the market is expected to double in size by 2020 as the country’s population, personal incomes and dairy consumption increase.