Big boys line up to bid for Vietnam's top brewer

Heineken, Asahi and Kirin among 7 foreign companies keen on buying stake in Sabeco

HO CHI MINH CITY • The world's largest brewers from Europe to Asia are lining up for a chance to buy a stake in Vietnam's top beer- maker, in a deal worth at least US$1.8 billion (S$2.4 billion) as consumption in the South-east Asian country surges.

Dutch brewer Heineken,  Anheuser-Busch InBev and its merger partner SABMiller, as well as Japan's Asahi Group Holdings and Kirin Holdings are among seven foreign companies that have registered to bid for stakes in Saigon Beer Alcohol Beverage Corp, also known as Sabeco, its chief executive officer Le Hong Xanh said.

"Sabeco doesn't care if the buyer is an international or domestic company," Mr Xanh said in an interview. "All we care about is who will pay the most. The government wants to sell its stakes as soon as possible."

The deal is garnering interest from foreign beer brands attracted by Vietnam's young population and rising middle class in one of the world's fastest-growing economies.

Its government is divesting stakes in its two market-leading brewers as a growing budget deficit forces the leadership to accelerate a plan to reduce holdings in state-owned firms.

Thailand's Singha Asia Holding and Thai Beverage have also signed up to take part in the Sabeco auction, while Vietnamese brokerage Saigon Securities has joined the latest list of local potential buyers, said Mr Xanh.

That line-up is not permanent, and companies could drop out or more could join the list, he said.

The Ministry of Industry and Trade announced on Aug 31 the government's plan to sell its entire 89.59 per cent stake in Sabeco, which it has valued at US$1.8 billion, and its 82 per cent holding in Hanoi Beer Alcohol Beverage Corp for US$404 million. Sabeco will be sold in two tranches this year and next year, while Hanoi Beer, or Habeco, will be divested this year, it said.

"There aren't that many markets where foreign brewers would have a chance to secure an interest in a market-leading brewer," said Mr John Ditty, managing partner of KPMG Vietnam's deals advisory unit. The government's valuation of its stake isn't "too much", he said in an interview in Ho Chi Minh City.

The brewer expects net income to rise 10 per cent to about 3.76 trillion dong (S$227 million) this year, from 3.42 trillion dong it reported in 2015, double its target growth rate for the year, Mr Xanh said. Sabeco, brewer of Saigon Beer and 333 Beer, prefers to have several major shareholders, and its auction could attract more domestic companies, some of which could form joint ventures to pool resources for their bids, Mr Xanh said.

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A version of this article appeared in the print edition of The Straits Times on September 09, 2016, with the headline 'Big boys line up to bid for Vietnam's top brewer'. Print Edition | Subscribe