HCM CITY (VNS) — Mergers and Acquisitions are becoming increasingly important tools for firms to restructure and improve their efficiency in the context of the global recession, but ensuring they do not cause monopolies is a hard task, experts told a conference in HCM City.
Speaking at the two-day "Mergers and Acquisitions impacts on ASEAN" conference, which closed yesterday, delegates said M&A interest in ASEAN member nations from outside remains strong.
Financials, industrials, and energy and power have been the three key industries involved in M&A.
But Prof Christopher Kummer, head of the Switzerland-based Institute for Mergers, Acquisitions and Alliances (IMAA), said that M&A activities would significantly decline in ASEAN this year, falling by 29 per cent in number of deals and 37 per cent in value.
"However, M&A transactions among [Southeast Asian] firms has increased by 176 per cent in value despite a 22 per cent drop in number of deals this year. Is it the beginning of a wider alliance among ASEAN's companies?"
Dr Alan Phan of Viasa Fund said there had been a trend of companies in the region buying assets in the US and EU.
He also pointed out the challenges faced by ASEAN members in entering the international M&A market: different political and legal frameworks, diverse cultures and religions; unequal incomes and development levels; and a deep-rooted bureaucratic political system.
"M&A will continue to grow strongly and ASEAN will have a legal framework by 2025.
"By the time most M&A will happen between domestic companies."
Maureen K. Ohlausen of the US Federal Trade Commission warned that M&A could possibly limit competition since one big company would like to buy all its competitors.
The laws should help achieve the two important goals of promoting foreign direct investment and improving market efficiency, but prevent a change from state to private monopoly.
In Viet Nam, the value of M&A deals has been steadily increasing, going up from $1.14 billion in 2009 to $6.25 billion last year and nearly $2 billion in the first quarter of this year.
Around 65 per cent of the deals involved a foreign investor.
Tran Phuong Lan, head of the Viet Nam Competition Authority's Supervision and Competition Management Department, said: "M&A deals have become complicated with vertical mergers to gain control of input sources and supply, conglomerate mergers to expand business, mergers to restructure business in a more efficient manner, and indirect takeovers."
She stressed the role played by private equity firms, which accounted for a large portion of the M&A deals, both as buyers and sellers.
Deals done in the past few years fall in two main categories: foreign companies buying Vietnamese ones (40 per cent) and local firms buying other local ones (40 per cent).
"Recently more and more Vietnamese companies have been buying foreign companies operating in Viet Nam," she said.
The banking and financial services industry accounts for the largest number of deals – 55 per cent in 2011 – followed by the consumer goods sector. — VNS