Vinamilk acquires majority stake in competitor

By Dat Nguyen   December 22, 2019 | 07:29 pm PT
Vinamilk acquires majority stake in competitor
An employee examines products at a Vinamilk factory in Binh Duong Province. Photo by VnExpress/Quynh Tran.
Vietnam’s biggest dairy company Vinamilk has acquired a majority stake in Moc Chau Milk, entrenching its market dominance.

Vinamilk, formally Vietnam Dairy Products Jsc, has increased its ownership in GTNfoods from 43.17 percent to 75 percent, the dairy giant said in a recent statement. GTNfoods own a 51 percent stake in Moc Chau Milk, the biggest dairy producer in the north.

The majority of shares were bought on December 18, when the Ho Chi Minh Stock Exchange recorded almost VND1.8 trillion ($77.54 million) worth of GTN shares being acquired at the price of VND22,800 (98 cents) per share, 5.5 percent higher than market value.

Vinamilk made the acquisition two days after shareholders of GTNfoods approved the sale. In March, the board of GTNfoods rejected Vinamilk’s proposal to increase ownership.

Analysts say that the deal will expand the ecosystem of Vinamilk amidst slower growth. Moc Chau Milk accounts for 9 percent of the market, which would take Vinamilk nine years to gain at its current expansion rate, according to stock brokerage Saigon Securities Inc (SSI).

Vinamilk accounts for over half of the dairy market. In the third quarter, it posted revenues of VND14.29 trillion ($615.58 million), up 4 percent year-on-year, against a target of 7 percent.

Vietnam’s dairy output rose 6.9 percent to 936,000 tons last year, and is set to rise to one million tons next year and two million tons by 2030, according to the Ministry of Agriculture and Rural Development.

The firm exports dairy products to 46 markets with 70 percent going to the Middle East.

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