Ice10-mergers & Acquisitions News
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Vietnam
International Investment Connection and Enterprises Trading., JSC
Weekly issued by ICE – M&A via email and website
&
wWw.ice.com.vn & wWw.ma-vietnam.com
Weekly issued to about 82.000 emails of investors, managers, and investment organizations & groups in Vietnam or overseas
Volunme ICE-10, Tuesday September 23th, 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: Part 1: Global M & A market Part 2: Vietnam and M&A Tendency >>> Mergers and Acquisitions: Break Ups Part 3: M & A Investment Opportunities
Ads here as sponsors
PART 1: GLOBAL M & A MARKET
Goldman Sachs to be regulated by Fed
PHILADELPHIA - Goldman Sachs Group Inc (GS.N) said on Sunday it would become the fourth largest bank holding company and would be regulated by the Federal Reserve. Goldman said it would move assets from a number of strategic businesses, including its lending businesses, into an entity called GS Bank USA that would have more than $150 billion in assets. GS Bank USA would be one of the ten largest banks in the United States, with assets that are fully funded for term and available to funded by the Federal Reserve. Goldman said it intends to grow our deposit base through acquisitions and organically.
( Source: Reuters)
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE–Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M & A News to contribute ideas or place orders this News-Letter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 1
M&A AND INTERNATIONAL INVESTMENT CONNECTION and ship gas to trading hubs, for Chesapeake cuts drilling plan on about $1 billion. McClendon has said the assets are not yet profitable as natgas price drop they are being expanded to reach SAN FRANCISCO- Chesapeake Energy new wells, but a partner would help Corp (CHK.N) has cut capital fund their growth. expenditure for drilling by 17 percent through 2010 due to a plunge in The company said it was transferring natural gas prices and concerns about all midstream assets outside of a U.S. market surplus, the company Appalachia into new partnership entities managed by Chesapeake said on Monday. Midstream Partners LP, which is The company also said a 50 percent finalizing a secured $500 million drop in natural gas prices since June revolving credit facility. 30 had helped improve its energy price hedging position by $6 billion, CUTTING DEBT and its shares rose 1 percent. Since the end of the second quarter, Chesapeake, which said it became the the value of Chesapeake Energy's top U.S. natural gas producer last hedging positions had improved from quarter, is also cutting its forecast of a negative $6.5 billion to a negative growth in gas production to 18 $500 million on Sept. 18. percent from 21 percent for this year and 16 percent from 19 percent for The company, which had lost a net $1.6 billion last quarter due to both 2009 and 2010. hedging activity, said it would use an It will temporarily cut production by a anticipated $2 billion of excess cash in net 100 million cubic feet per day in 2009 and 2010 to pay down debt, the Mid-Continent, where wellhead which grew to a net $13.7 billion at prices of $3 to $5 per thousand cubic the end of June. feet were "substantially below" breakeven. That is 4 percent of its total Of $3.2 billion cut from the drilling capital expenditure budget through capacity. 2010, $1.9 billion is due to reduced "We will monitor market conditions drilling activity, while the rest is and bring curtailed natural gas attributable to its Fayetteville and production volumes back on stream Marcellus shale joint ventures, the as prices improve," Chief Executive company said. Aubrey McClendon said. On Friday, Chesapeake closed its $1.9 The number of its operated drilling billion sale of 25 percent of the rigs will fall to about 140 rigs by the Fayetteville shale to BP Plc (BP.L). end of this year from 157 now, and that will stay steady for the next two Chesapeake, which had said this month it was in talks with companies years, the company said. interested in buying into Marcellus, Chesapeake went on to say it had said on Monday it was making resumed plans to sell a minority stake progress and expects completion this in its "midstream" assets that process year.
Chinese media have reported staterun China National Petroleum Corp, parent of PetroChina (PTR.N) is interested, though Chesapeake has declined to comment. Chesapeake said it completed more horizontal wells in Haynesville shale with average production topping 10 million feet equivalent, bringing its there to 14.
three the daily cubic total
Chesapeake has been at the forefront of U.S. efforts to extract more gas from shale rock formations, which was deemed uneconomical until a spike in prices attracted other players. Now Chesapeake is selling stakes to raise cash and reduce risk. After an initial dip, shares of Chesapeake rose 1.1 percent to $41.35 in after-hours trade on Monday, after sliding 2 percent in regular New York Stock Exchange trade. Earlier on Monday, the Oklahoma City-based company set a quarterly dividend of 7.5 cents per share, unchanged from the previous quarter, when it increased its payout by 11 percent.
(Source: Reuters)
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 2
M&A AND INTERNATIONAL INVESTMENT CONNECTION
Top Global M&A Deals Target UST Inc Origin Energy CSG Ltd ImClone Systems Inc Deutsche Postbank AG Longs Drug Stores Corp Zenna Overseas Ltd Compania de Telecomunicaciones de Chile SA First Calgary Petroleums Ltd SEUR SA Fluid & Power business unit
Acquiror Altria Group Inc ConocoPhillips Undisclosed Acquirer Deutsche Bank AG Walgreen Co Iconic Holdings Ltd Inversiones Telefonica Internacional Holding Ltda ENI SpA Geopost SA Clyde Blowers PLC
Value ($M) 11,556.3 7,836.0 6,089.8 3,948.8 2,700.6 1,460.1 986.5 864.0 743.6 595.0
Top Industries: Global M&A Target UST Inc Origin Energy CSG Ltd ImClone Systems Inc Deutsche Postbank AG Longs Drug Stores Corp Zenna Overseas Ltd Compania de Telecomunicaciones de Chile SA First Calgary Petroleums Ltd SEUR SA Fluid & Power business unit
Acquiror Altria Group Inc ConocoPhillips Undisclosed Acquirer Deutsche Bank AG Walgreen Co Iconic Holdings Ltd Inversiones Telefonica Internacional Holding Ltda ENI SpA Geopost SA Clyde Blowers PLC
Value ($M) 11,556.3 7,836.0 6,089.8 3,948.8 2,700.6 1,460.1 986.5 864.0 743.6 595.0
( Source: Reuters)
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 3
M&A AND INTERNATIONAL INVESTMENT CONNECTION
PART 2: VIETNAM AND M&A TENDENCY - MERGERS AND ACQUISITIONS: BREAK UPS
Legal framework for M&A called for Experts have called for state management agencies to set up a legal framework for merger and acquisition (M&A) activities, saying that after the hot development period, the banking system has shown a lot of shortcomings, which has prompted many of them to merge into each other to raise their competitiveness.
1,000 different services, while domestic banks only have 100. The second weak point is limited financial capability. The average stockholder equity of the 10 biggest banks in Vietnam is $500mil only. While state-owned banks have chartered capital equivalent to that of regional banks, other banks have little chartered capital, and need to increase capital in order to become more competitive. The third problem of the banking system is limited risk management capability. The credit growth rate has been very high in recent years, while banks’ technology remains weak. Banks’ operation scales have been expanded, but corporate governance and risk management skills have not improved accordingly.
At a workshop on the banking system’s renovation and development in the period of global integration, a representative from the Bank for Investment and Development of Vietnam (BIDV) pointed out three weak points of banks. First, bank services are not diversified. They mainly provide credit, payment and remittance services. Card services have just been provided recently, while other services like asset and investment management have not been developed. According to the State Bank of Vietnam, foreign banks now provide
Nearly 50 credit institutions had growth rates of outstanding loans at over 50% in 2007, while nearly 30 institutions had growth rates at over 100%. Nguyen Thi Mui, Deputy Director of the Finance Institute, said that a recent survey of the operations of 32 commercial banks in Vietnam showed that only 79% of banks use capital effectively, while a lot of banks have been found as using short-term capital for long-term loaning.
always under pressure from overly high expectations of shareholders.
the
Mui said that with the existing problems, commercial banks should be restructured. She said that management agencies should set up a mechanism to encourage banks to merge into each other in order to, on one hand, improve their financial capabilities, and on other hand, reduce the number of banks. Le Dac Son, General Director of VP Bank, also said that the government should set up a suitable legal framework to encourage small banks to merge into bigger ones. Banks may want to do the M&A now, but they do not know which regulations to follow in pursuit of the goal. Regarding the standards for banks’ operations, Le Thi Huyen Dieu from Vietcombank said that banks need to have the capital adequacy ratio at 10% in the current period (the ratio should be 8% in normal conditions); the ratio of lending on mobilised capital at less than 60% (the ratio should be less than 80% in a stable economy); the proportion of capital mobilised from the interbank market accounts for 5% of total assets.
(Source: DTCK)
The surveyors have also pointed out that risks are latent in the operations of joint-stock banks due to low capital levels, while these banks are
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 4
Mergers and Acquisitions: Break Ups As mergers capture the imagination of many investors and companies, the idea of getting smaller might seem counterintuitive. But corporate break-ups, or de-mergers, can be very attractive options for companies and their shareholders. Advantages The rationale behind a spinoff, tracking stock or carve-out is that "the parts are greater than the whole." These corporate restructuring techniques, which involve the separation of a business unit or subsidiary from the parent, can help a company raise additional equity funds. A break-up can also boost a company's valuation by providing powerful incentives to the people who work in the separating unit, and help the parent's management to focus on core operations. Most importantly, shareholders get better information about the business unit because it issues separate financial statements. This is particularly useful when a company's traditional line of business differs from the separated business unit. With separate financial disclosure, investors are better equipped to gauge the value of the parent corporation. The parent company might attract more investors and, ultimately, more capital. Also, separating a subsidiary from its parent can reduce internal competition for corporate funds. For investors, that's great news: it curbs the kind of negative internal wrangling that can compromise the unity and productivity of a company. For employees of the new separate entity, there is a publicly traded stock to motivate and reward them. Stock options in the parent often provide little incentive to subsidiary managers, especially because their efforts are buried in the firm's overall performance. Disadvantages That said, de-merged firms are likely to be substantially smaller than their parents, possibly making it harder to tap credit markets and costlier finance that may be affordable only for larger companies. And the smaller size of the firm may mean it has less representation on major indexes, making it more difficult to attract interest from institutional investors. Meanwhile, there are the extra costs that the parts of the business face if separated. When a firm divides itself into smaller units, it may be losing the synergy that it had as a larger entity. For instance, the division of expenses such as marketing, administration and research and development (R&D) into different business units may cause redundant costs without increasing overall revenues.
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE–Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M & A News to contribute ideas or place orders this News-Letter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 5
M&A AND INTERNATIONAL INVESTMENT CONNECTION
VIETNAM SHORT INVESTMENT NEWS US firm optimistic about business in Vietnam How Kam Chiong, Director of Amway Vietnam, a branch of US Amway, has expressed his confidence that the company will succeed in doing business in the country. The director said on September 15 that his belief is well-grounded, as the local populous market has a large workforce with support from managing agencies and the legal system. Mr How said direct selling became legal in Vietnam in 2005 following the promulgation of the Competition Law and he described Decree 06/2008/ND-CP issued by the Vietnamese government as “a strong legal foundation” for Amway’s operation in the country. In October 2007, Amway Vietnam inaugurated a plant with production lines in the southern province of Dong Nai to ensure the quality of its products. This move has made Vietnam the second country in the world to have an Amway’s plant apart from the US. Amway officially began operation in Vietnam in February with its headquarters, distribution and training centres located in Ho Chi Minh City.The company plans to increase its portfolio from the current 15 types of products to 40 by the end of this year, said How Kam Chiong.
Source: vovnews Strengthening Vietnam-Russia strategic partnership Deputy Prime Minister Pham Gia Khiem and Vice Speaker of the State Duma Ivan Melnikov have affirmed that sharing the same views at regional and international forums will help consolidate the relations of friendship and co-operation between Vietnam and Russia. During his official visit to Russia, Deputy Prime Minister and Foreign Minister Pham Gia Khiem on September 15 placed a wreath at the Ho Chi Minh Statue in the south-western part of Moscow. On the same day, he met with Vice Speaker of the State Duma Ivan Melnikov who emphasized on fine development of friendship, co-operation and strategic partnership between the two countries. Mr Melnikov considered Vietnam Cultural Week in Russia as an important factor in strengthening bilateral relations. He announced that he will visit Vietnam in the near future. Earlier, Deputy PM. Khiem visited the Vietnamese Embassy in Russia and met with embassy staff and Vietnamese people living in Russia. He informed them of the country’s current situation as well as State and Party policies for overseas Vietnamese.
(Source: vovnews)
350 million USD mobilised for agriculture in 2009 The Ministry of Agriculture and Rural Development (MARD) plans to mobilise 350 million USD from outside sources for agricultural development in 2009. Of the amount, 200 million USD is expected to come from official development assistance (ODA) capital and the rest from foreign direct investment (FDI). Also in 2009, the MARD will continue negotiations on tariff and non-tariff, agricultural services and building free trade among the Association of Southeast Asian Nations (ASEAN) and the Republic of Korea , India , Japan and Australia with the hope of helping Vietnamese businesses expand its agro-forestry market.
(Source: VNA)
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 6
M&A AND INTERNATIONAL INVESTMENT CONNECTION
PART 3: M&A INVESTMENT OPPOTUNITIES
PROJECT INVESTMENT OPPTUNITIES
M&A- 47: Calling for investment in or transferring Resort & Ecotourism Area Location
Phu Tho province
Business fields
Real- Estate
Total investment
220,121,754 thousand VND
Available legal documents of the project
Completed and sufficient
Project land status
Planning indicators of the project
Completed clearance, aggradation and construction of some fundamental project items. Land for lease in 45 years - Area: 886.991 m2 - Land use coefficient: 0.8% of the whole land area - Construction purposes: Spiritual Spas – Resorts – Eco-tourism
Current status of the project
Completed construction of roads and the project management room
Economic indicators of the project
NPV: 553,645,814,704 IRR: 30% Pay-back period: 6 years and 11 months (Excluding construction period)
Key strong points of the project
Situated in the area of great cultural and spiritual value of Hung Vuong age
Co-operation forms
Joint- Venture or whole transference
Value of Investment
Partial or Whole project transference
ICE’s Comment
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 7
M&A AND INTERNATIONAL INVESTMENT CONNECTION M&A-49: Calling for investment in or transferring global 300-patient bed- hospital
Location
Hanoi City
Business fields
Hospital, sanatorium, treatment, health care services…
Total investment
50,000,000 USD (Fifty million US dollars)
Available legal documents of the project
Investment certificate The right of using land certificate Construction licence Detail drawing Technical – economy data Licence in emergency by helicopter at the top of the building… Completely land clearance and Compensation Land lease period : 40 years (Land granting time: 2004) - Area: 9998 M2 - Construction density: Unlimited - Storey height: 9 stories + 01 basement - Land use coefficient: - Purposes: Hospitals meeting international standards ... Completely land clearance and Compensation
Project land status
Planning indicators of the project
Current status of the project Economic indicators of the project
Pay-back period: 16 year
Key strong points of the project
Construction of a hospital meeting international standards in Hanoi
Co-operation forms
Transference of 90% project shares
Value of Investment
Transference price : 34 million USD
ICE’s Comment
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 8
M&A AND INTERNATIONAL INVESTMENT CONNECTION
M & A INVESTMENT OPPTUNITIES M&A-48: Selling a company which has real-estate and gasoline business certificate in Bac Giang
Location
Bac Giang
Business Fields
Constructive materials, restaurant, hotel, having gasoline business certificate.
Land area
10.000 m2 ( 3 fronts land)
Legal documents
Completed and sufficient
Current statue
Front of highway 1A, 132m long, convenience for busines Front of the way to Industrial park completely, 36m large Front of domestic road , only construction and business
Financial Statue
Clear, no tax debts
Transference form
whole transference
Transference price
7 billion VND( price on the market is 10 billion)
ICE’s Comment
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 9
M&A AND INTERNATIONAL INVESTMENT CONNECTION
M&A -49: Selling a hotel which has total area 2.900 m2 in HCM city
Location
Thu Duc- Ho Chi Minh.
Business Fields
Restaurant, hotel
Area
2.900m2
Time of land leasing Legal document
Long-term Sufficient and clear
Business status
Room using capacity: 150% to 250%. Equipment of each room is sufficient: furniture, bed, cupboard, air-conditioner, television … Customers are very rich: Civil servant, staff going on a mission, passer-by, foreigners.
Selling reason
Shifting from one kind of undertaking to another
Transference form
Whole transference
Transference price
27 billion including All the area has sufficient legal document about sovereignty. All the material facilities.
ICE’s Comment
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 10
M&A AND INTERNATIONAL INVESTMENT CONNECTION
M&A-50: Selling a draft beer restaurant in Hanoi.
Location
Ha Noi
Business fields
Restaurant
Area
300m2
Legal document
Clear
Current status
The contract is still available for 6 years, used for 2 years (maybe extend- private land) Labour: 20 including: table labour, kitchen labour, protector and manager. Assets: the equipments serve for business: Furniture, kitchen, 2 food product cupboard, beer cellar -
Object serving: from the common people to high-ranking people
-
Average customers: 30 tables
Key strong points
Nice view Large parking car
Transference types
Whole transference
Transference price
600 million
ICE’s comment
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 11
International Investment Connection and Enterprises Trading., JSC
Weekly issued by ICE – M&A via email and website
&
wWw.ice.com.vn & wWw.ma-vietnam.com
Weekly issued to about 82.000 emails of investors, managers, and investment organizations & groups in Vietnam or overseas
Volunme ICE-10, Tuesday September 23th, 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: Part 1: Global M & A market Part 2: Vietnam and M&A Tendency >>> Mergers and Acquisitions: Break Ups Part 3: M & A Investment Opportunities
Ads here as sponsors
PART 1: GLOBAL M & A MARKET
Goldman Sachs to be regulated by Fed
PHILADELPHIA - Goldman Sachs Group Inc (GS.N) said on Sunday it would become the fourth largest bank holding company and would be regulated by the Federal Reserve. Goldman said it would move assets from a number of strategic businesses, including its lending businesses, into an entity called GS Bank USA that would have more than $150 billion in assets. GS Bank USA would be one of the ten largest banks in the United States, with assets that are fully funded for term and available to funded by the Federal Reserve. Goldman said it intends to grow our deposit base through acquisitions and organically.
( Source: Reuters)
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE–Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M & A News to contribute ideas or place orders this News-Letter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 1
M&A AND INTERNATIONAL INVESTMENT CONNECTION and ship gas to trading hubs, for Chesapeake cuts drilling plan on about $1 billion. McClendon has said the assets are not yet profitable as natgas price drop they are being expanded to reach SAN FRANCISCO- Chesapeake Energy new wells, but a partner would help Corp (CHK.N) has cut capital fund their growth. expenditure for drilling by 17 percent through 2010 due to a plunge in The company said it was transferring natural gas prices and concerns about all midstream assets outside of a U.S. market surplus, the company Appalachia into new partnership entities managed by Chesapeake said on Monday. Midstream Partners LP, which is The company also said a 50 percent finalizing a secured $500 million drop in natural gas prices since June revolving credit facility. 30 had helped improve its energy price hedging position by $6 billion, CUTTING DEBT and its shares rose 1 percent. Since the end of the second quarter, Chesapeake, which said it became the the value of Chesapeake Energy's top U.S. natural gas producer last hedging positions had improved from quarter, is also cutting its forecast of a negative $6.5 billion to a negative growth in gas production to 18 $500 million on Sept. 18. percent from 21 percent for this year and 16 percent from 19 percent for The company, which had lost a net $1.6 billion last quarter due to both 2009 and 2010. hedging activity, said it would use an It will temporarily cut production by a anticipated $2 billion of excess cash in net 100 million cubic feet per day in 2009 and 2010 to pay down debt, the Mid-Continent, where wellhead which grew to a net $13.7 billion at prices of $3 to $5 per thousand cubic the end of June. feet were "substantially below" breakeven. That is 4 percent of its total Of $3.2 billion cut from the drilling capital expenditure budget through capacity. 2010, $1.9 billion is due to reduced "We will monitor market conditions drilling activity, while the rest is and bring curtailed natural gas attributable to its Fayetteville and production volumes back on stream Marcellus shale joint ventures, the as prices improve," Chief Executive company said. Aubrey McClendon said. On Friday, Chesapeake closed its $1.9 The number of its operated drilling billion sale of 25 percent of the rigs will fall to about 140 rigs by the Fayetteville shale to BP Plc (BP.L). end of this year from 157 now, and that will stay steady for the next two Chesapeake, which had said this month it was in talks with companies years, the company said. interested in buying into Marcellus, Chesapeake went on to say it had said on Monday it was making resumed plans to sell a minority stake progress and expects completion this in its "midstream" assets that process year.
Chinese media have reported staterun China National Petroleum Corp, parent of PetroChina (PTR.N) is interested, though Chesapeake has declined to comment. Chesapeake said it completed more horizontal wells in Haynesville shale with average production topping 10 million feet equivalent, bringing its there to 14.
three the daily cubic total
Chesapeake has been at the forefront of U.S. efforts to extract more gas from shale rock formations, which was deemed uneconomical until a spike in prices attracted other players. Now Chesapeake is selling stakes to raise cash and reduce risk. After an initial dip, shares of Chesapeake rose 1.1 percent to $41.35 in after-hours trade on Monday, after sliding 2 percent in regular New York Stock Exchange trade. Earlier on Monday, the Oklahoma City-based company set a quarterly dividend of 7.5 cents per share, unchanged from the previous quarter, when it increased its payout by 11 percent.
(Source: Reuters)
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 2
M&A AND INTERNATIONAL INVESTMENT CONNECTION
Top Global M&A Deals Target UST Inc Origin Energy CSG Ltd ImClone Systems Inc Deutsche Postbank AG Longs Drug Stores Corp Zenna Overseas Ltd Compania de Telecomunicaciones de Chile SA First Calgary Petroleums Ltd SEUR SA Fluid & Power business unit
Acquiror Altria Group Inc ConocoPhillips Undisclosed Acquirer Deutsche Bank AG Walgreen Co Iconic Holdings Ltd Inversiones Telefonica Internacional Holding Ltda ENI SpA Geopost SA Clyde Blowers PLC
Value ($M) 11,556.3 7,836.0 6,089.8 3,948.8 2,700.6 1,460.1 986.5 864.0 743.6 595.0
Top Industries: Global M&A Target UST Inc Origin Energy CSG Ltd ImClone Systems Inc Deutsche Postbank AG Longs Drug Stores Corp Zenna Overseas Ltd Compania de Telecomunicaciones de Chile SA First Calgary Petroleums Ltd SEUR SA Fluid & Power business unit
Acquiror Altria Group Inc ConocoPhillips Undisclosed Acquirer Deutsche Bank AG Walgreen Co Iconic Holdings Ltd Inversiones Telefonica Internacional Holding Ltda ENI SpA Geopost SA Clyde Blowers PLC
Value ($M) 11,556.3 7,836.0 6,089.8 3,948.8 2,700.6 1,460.1 986.5 864.0 743.6 595.0
( Source: Reuters)
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 3
M&A AND INTERNATIONAL INVESTMENT CONNECTION
PART 2: VIETNAM AND M&A TENDENCY - MERGERS AND ACQUISITIONS: BREAK UPS
Legal framework for M&A called for Experts have called for state management agencies to set up a legal framework for merger and acquisition (M&A) activities, saying that after the hot development period, the banking system has shown a lot of shortcomings, which has prompted many of them to merge into each other to raise their competitiveness.
1,000 different services, while domestic banks only have 100. The second weak point is limited financial capability. The average stockholder equity of the 10 biggest banks in Vietnam is $500mil only. While state-owned banks have chartered capital equivalent to that of regional banks, other banks have little chartered capital, and need to increase capital in order to become more competitive. The third problem of the banking system is limited risk management capability. The credit growth rate has been very high in recent years, while banks’ technology remains weak. Banks’ operation scales have been expanded, but corporate governance and risk management skills have not improved accordingly.
At a workshop on the banking system’s renovation and development in the period of global integration, a representative from the Bank for Investment and Development of Vietnam (BIDV) pointed out three weak points of banks. First, bank services are not diversified. They mainly provide credit, payment and remittance services. Card services have just been provided recently, while other services like asset and investment management have not been developed. According to the State Bank of Vietnam, foreign banks now provide
Nearly 50 credit institutions had growth rates of outstanding loans at over 50% in 2007, while nearly 30 institutions had growth rates at over 100%. Nguyen Thi Mui, Deputy Director of the Finance Institute, said that a recent survey of the operations of 32 commercial banks in Vietnam showed that only 79% of banks use capital effectively, while a lot of banks have been found as using short-term capital for long-term loaning.
always under pressure from overly high expectations of shareholders.
the
Mui said that with the existing problems, commercial banks should be restructured. She said that management agencies should set up a mechanism to encourage banks to merge into each other in order to, on one hand, improve their financial capabilities, and on other hand, reduce the number of banks. Le Dac Son, General Director of VP Bank, also said that the government should set up a suitable legal framework to encourage small banks to merge into bigger ones. Banks may want to do the M&A now, but they do not know which regulations to follow in pursuit of the goal. Regarding the standards for banks’ operations, Le Thi Huyen Dieu from Vietcombank said that banks need to have the capital adequacy ratio at 10% in the current period (the ratio should be 8% in normal conditions); the ratio of lending on mobilised capital at less than 60% (the ratio should be less than 80% in a stable economy); the proportion of capital mobilised from the interbank market accounts for 5% of total assets.
(Source: DTCK)
The surveyors have also pointed out that risks are latent in the operations of joint-stock banks due to low capital levels, while these banks are
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
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Mergers and Acquisitions: Break Ups As mergers capture the imagination of many investors and companies, the idea of getting smaller might seem counterintuitive. But corporate break-ups, or de-mergers, can be very attractive options for companies and their shareholders. Advantages The rationale behind a spinoff, tracking stock or carve-out is that "the parts are greater than the whole." These corporate restructuring techniques, which involve the separation of a business unit or subsidiary from the parent, can help a company raise additional equity funds. A break-up can also boost a company's valuation by providing powerful incentives to the people who work in the separating unit, and help the parent's management to focus on core operations. Most importantly, shareholders get better information about the business unit because it issues separate financial statements. This is particularly useful when a company's traditional line of business differs from the separated business unit. With separate financial disclosure, investors are better equipped to gauge the value of the parent corporation. The parent company might attract more investors and, ultimately, more capital. Also, separating a subsidiary from its parent can reduce internal competition for corporate funds. For investors, that's great news: it curbs the kind of negative internal wrangling that can compromise the unity and productivity of a company. For employees of the new separate entity, there is a publicly traded stock to motivate and reward them. Stock options in the parent often provide little incentive to subsidiary managers, especially because their efforts are buried in the firm's overall performance. Disadvantages That said, de-merged firms are likely to be substantially smaller than their parents, possibly making it harder to tap credit markets and costlier finance that may be affordable only for larger companies. And the smaller size of the firm may mean it has less representation on major indexes, making it more difficult to attract interest from institutional investors. Meanwhile, there are the extra costs that the parts of the business face if separated. When a firm divides itself into smaller units, it may be losing the synergy that it had as a larger entity. For instance, the division of expenses such as marketing, administration and research and development (R&D) into different business units may cause redundant costs without increasing overall revenues.
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE–Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M & A News to contribute ideas or place orders this News-Letter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 5
M&A AND INTERNATIONAL INVESTMENT CONNECTION
VIETNAM SHORT INVESTMENT NEWS US firm optimistic about business in Vietnam How Kam Chiong, Director of Amway Vietnam, a branch of US Amway, has expressed his confidence that the company will succeed in doing business in the country. The director said on September 15 that his belief is well-grounded, as the local populous market has a large workforce with support from managing agencies and the legal system. Mr How said direct selling became legal in Vietnam in 2005 following the promulgation of the Competition Law and he described Decree 06/2008/ND-CP issued by the Vietnamese government as “a strong legal foundation” for Amway’s operation in the country. In October 2007, Amway Vietnam inaugurated a plant with production lines in the southern province of Dong Nai to ensure the quality of its products. This move has made Vietnam the second country in the world to have an Amway’s plant apart from the US. Amway officially began operation in Vietnam in February with its headquarters, distribution and training centres located in Ho Chi Minh City.The company plans to increase its portfolio from the current 15 types of products to 40 by the end of this year, said How Kam Chiong.
Source: vovnews Strengthening Vietnam-Russia strategic partnership Deputy Prime Minister Pham Gia Khiem and Vice Speaker of the State Duma Ivan Melnikov have affirmed that sharing the same views at regional and international forums will help consolidate the relations of friendship and co-operation between Vietnam and Russia. During his official visit to Russia, Deputy Prime Minister and Foreign Minister Pham Gia Khiem on September 15 placed a wreath at the Ho Chi Minh Statue in the south-western part of Moscow. On the same day, he met with Vice Speaker of the State Duma Ivan Melnikov who emphasized on fine development of friendship, co-operation and strategic partnership between the two countries. Mr Melnikov considered Vietnam Cultural Week in Russia as an important factor in strengthening bilateral relations. He announced that he will visit Vietnam in the near future. Earlier, Deputy PM. Khiem visited the Vietnamese Embassy in Russia and met with embassy staff and Vietnamese people living in Russia. He informed them of the country’s current situation as well as State and Party policies for overseas Vietnamese.
(Source: vovnews)
350 million USD mobilised for agriculture in 2009 The Ministry of Agriculture and Rural Development (MARD) plans to mobilise 350 million USD from outside sources for agricultural development in 2009. Of the amount, 200 million USD is expected to come from official development assistance (ODA) capital and the rest from foreign direct investment (FDI). Also in 2009, the MARD will continue negotiations on tariff and non-tariff, agricultural services and building free trade among the Association of Southeast Asian Nations (ASEAN) and the Republic of Korea , India , Japan and Australia with the hope of helping Vietnamese businesses expand its agro-forestry market.
(Source: VNA)
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 6
M&A AND INTERNATIONAL INVESTMENT CONNECTION
PART 3: M&A INVESTMENT OPPOTUNITIES
PROJECT INVESTMENT OPPTUNITIES
M&A- 47: Calling for investment in or transferring Resort & Ecotourism Area Location
Phu Tho province
Business fields
Real- Estate
Total investment
220,121,754 thousand VND
Available legal documents of the project
Completed and sufficient
Project land status
Planning indicators of the project
Completed clearance, aggradation and construction of some fundamental project items. Land for lease in 45 years - Area: 886.991 m2 - Land use coefficient: 0.8% of the whole land area - Construction purposes: Spiritual Spas – Resorts – Eco-tourism
Current status of the project
Completed construction of roads and the project management room
Economic indicators of the project
NPV: 553,645,814,704 IRR: 30% Pay-back period: 6 years and 11 months (Excluding construction period)
Key strong points of the project
Situated in the area of great cultural and spiritual value of Hung Vuong age
Co-operation forms
Joint- Venture or whole transference
Value of Investment
Partial or Whole project transference
ICE’s Comment
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
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M&A AND INTERNATIONAL INVESTMENT CONNECTION M&A-49: Calling for investment in or transferring global 300-patient bed- hospital
Location
Hanoi City
Business fields
Hospital, sanatorium, treatment, health care services…
Total investment
50,000,000 USD (Fifty million US dollars)
Available legal documents of the project
Investment certificate The right of using land certificate Construction licence Detail drawing Technical – economy data Licence in emergency by helicopter at the top of the building… Completely land clearance and Compensation Land lease period : 40 years (Land granting time: 2004) - Area: 9998 M2 - Construction density: Unlimited - Storey height: 9 stories + 01 basement - Land use coefficient: - Purposes: Hospitals meeting international standards ... Completely land clearance and Compensation
Project land status
Planning indicators of the project
Current status of the project Economic indicators of the project
Pay-back period: 16 year
Key strong points of the project
Construction of a hospital meeting international standards in Hanoi
Co-operation forms
Transference of 90% project shares
Value of Investment
Transference price : 34 million USD
ICE’s Comment
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 8
M&A AND INTERNATIONAL INVESTMENT CONNECTION
M & A INVESTMENT OPPTUNITIES M&A-48: Selling a company which has real-estate and gasoline business certificate in Bac Giang
Location
Bac Giang
Business Fields
Constructive materials, restaurant, hotel, having gasoline business certificate.
Land area
10.000 m2 ( 3 fronts land)
Legal documents
Completed and sufficient
Current statue
Front of highway 1A, 132m long, convenience for busines Front of the way to Industrial park completely, 36m large Front of domestic road , only construction and business
Financial Statue
Clear, no tax debts
Transference form
whole transference
Transference price
7 billion VND( price on the market is 10 billion)
ICE’s Comment
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 9
M&A AND INTERNATIONAL INVESTMENT CONNECTION
M&A -49: Selling a hotel which has total area 2.900 m2 in HCM city
Location
Thu Duc- Ho Chi Minh.
Business Fields
Restaurant, hotel
Area
2.900m2
Time of land leasing Legal document
Long-term Sufficient and clear
Business status
Room using capacity: 150% to 250%. Equipment of each room is sufficient: furniture, bed, cupboard, air-conditioner, television … Customers are very rich: Civil servant, staff going on a mission, passer-by, foreigners.
Selling reason
Shifting from one kind of undertaking to another
Transference form
Whole transference
Transference price
27 billion including All the area has sufficient legal document about sovereignty. All the material facilities.
ICE’s Comment
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 10
M&A AND INTERNATIONAL INVESTMENT CONNECTION
M&A-50: Selling a draft beer restaurant in Hanoi.
Location
Ha Noi
Business fields
Restaurant
Area
300m2
Legal document
Clear
Current status
The contract is still available for 6 years, used for 2 years (maybe extend- private land) Labour: 20 including: table labour, kitchen labour, protector and manager. Assets: the equipments serve for business: Furniture, kitchen, 2 food product cupboard, beer cellar -
Object serving: from the common people to high-ranking people
-
Average customers: 30 tables
Key strong points
Nice view Large parking car
Transference types
Whole transference
Transference price
600 million
ICE’s comment
SUCCESS PROMOTION – COMPANY VALUE ENHANCEMENT Vietnam M&A News-Letter – Copyright © 2008 ICE –Enterprise Trading and International Investment Connection – Issued weekly for domestic and foreign investors, enterprise owners and corporations. Please contact ICE’s editors of M&A News to contribute ideas or place orders this NewsLetter via e-mail. All right reserved. Tel:+84-4-6227724 Email:[email protected] Website:www.vni-connection.com
Page 11
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