Mobile World goes to M&A town with $110 million

12:14 | 25/08/2017

Mobile World Investment Corporation (MWG)’s shareholders agreed with an 85.93 per cent approval rate to spend VND2.5 trillion ($110 million) on mergers and acquisitions (M&A) in the coming period.

mobile world goes to ma town with 110 million Mobile World finishes electronics chain purchase negotiations
mobile world goes to ma town with 110 million MWG to spend $110 million acquiring electronics and pharmaceutical store chains
mobile world goes to ma town with 110 million Mobile World struggles with growth in saturated consumer electronics market
mobile world goes to ma town with 110 million
Mobile World is rumoured to be planning the acquisition of Tran Anh

The Ho Chi Minh City Stock Exchange revealed that at the shareholders’ meeting on August 22, MWG officially raised its budget for M&A activities to $110 million, five times as much as the initial budget approved by its annual shareholders’ meeting in 2017. Accordingly, MWG is forecasted to purchase an electronics and a pharmaceutical store chain this year.

Although MWG has not confirmed the electronics store chain it will acquire, rumours mention Tran Anh Digital World JSC and have been partly confirmed by a document submitted to Tran Anh’s shareholders on August 21. Specifically, Tran Anh mentioned delisting from the Hanoi Stock Exchange to sell more than 25 per cent of its stakes to MWG instead.

August 31 is the deadline for Tran Anh’s shareholders to vote for this plan, and the final results will be published in short order, as reported by newswire VnEconomy.

However, Tran Xuan Kien, Tran Anh’s chairman, did not reveal the price or the specific amount of stakes that MWG plans to acquire. However, the volume is expected to be bigger than 25 per cent, which is the minimum share volume requiring shareholders’ approval to sell.

As of December 12, 2016, Tran Xuan Kien and his wife Do Thi Thu Huong together held 11 million TAG shares, equivalent to 44 per cent of the chartered capital.

Besides, Huong’s sister Do Thi Kim Lien held 5.88 per cent of the chartered capital and Kien’s sister Tran Thi Van Trang and her husband Hoang Anh Tuan owned another 6 per cent at the time. The remaining 30.82 per cent was held by Nojima Corporation from Japan.

Tran Anh was a computer and computer devices store established in 2002 in Hanoi. After four years, in 2006, the company opened another store in Hanoi, taking the first step to developing into a chain. Instead of rampant expansion, it focused on providing quality until 2012, when Tran Anh had a chain of four electronics stores in Hanoi.

However, the participation of the Japanese strategic shareholder Nojima Corporation had a strong influence on its strategy, and between 2013 and 2015 Tran Anh opened six new stores each year. In 2016, the company launched a whopping 11 new stores. By the first half of 2017, there were 39 Tran Anh stores in 22 cities and provinces in northern Vietnam.

However, since the rapid expansion, Tran Anh’s profit has been plummeting as shown in the graph.

mobile world goes to ma town with 110 million
(Source: Cafef)

On the other hand, the trade-off between profitability and growth has made Tran Anh the leading electronics chain in northern Vietnam.

Thus, if MWG can solve Tran Anh’s profit and growth dilemma, it will make an exceptional foothold in northern Vietnam facilitating MWG’s expansion plans to become the biggest domestic electronics chain in the country.

By Trang Vu

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