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Trần Anh Digital and Mobile World on verge of merger

Update: August, 26/2017 - 09:31
Electronics retailer Trần Anh Digital World Company (TAG) is seeking its shareholders’ approval to sell a 25 per cent stake to Mobile World Investment Corporation (MWG), paving the way for a merger into the latter company. – Photo genk.vn

HÀ NỘI – Electronics retailer Trần Anh Digital World Company (TAG) is seeking its shareholders’ approval to sell a 25 per cent stake to Mobile World Investment Corporation (MWG), paving the way for a merger into the latter company.

The company’s existing shareholders are expected to send their feedback before the end of this month.

The share sale has confirmed recent speculation around the merger and acquisition (M&A) between Mobile World and Trần Anh Digital.

On Wednesday, shareholders of Mobile World Investment Corp gave their nod to increase the company’s new budget for M&A activities to VNĐ2.5 trillion (over US$110 million), a five-fold increase over the old budget of only VNĐ500 billion, which had been approved in March.

At a meeting in early August, Mobile World’s general director Nguyễn Đức Tài said the company planned to acquire a chain of electronics stores in the North. He declined to disclose the targeted company.

According to the approved plan, the M&A budget will be mobilised from loans, bonds and new share issues and undistributed profit. In addition, the mobile devices retailer will separately issue additional 6.7 million shares, worth VNĐ67 billion and equivalent to 2.18 per cent of its outstanding shares, to fewer than 10 investors in a private placement.

The new share issue is speculated to be designed to sell to Trần Anh Digital’s stakeholders.

Chairman Trần Xuân Kiên is the biggest stakeholder in Trần Anh with a 22.7 per cent holding, while his relatives own 33.2 per cent of the company’s charter capital. Japan’s Nomaji Group holds 30.8 per cent.

Win-Win M&A

Trần Anh Digital is one of the largest electronic chains in the North with 39 supermarkets, including 14 outlets in Hà Nội. Meanwhile, Mobile World is currently the biggest electronics and mobile devices retailer with over 1,500 retail stores nationwide.

Mobile World runs three major brands including Thế Giới Di Động, Điện Máy Xanh and Bách Hóa Xanh.

The M&A between Trần Anh and Mobile World is reportedly a win-win deal for the two companies as it could help Mobile World expand its coverage in the northern region while Trần Anh hopes to improve its profitability through the merger.

“The value of this deal is Trần Anh’s improvement in earnings to become comparable to the growth rate of Mobile World. At the same time, Mobile World can take advantage of Trần Anh’s customer service to reach customers in the North,” a report of HCM Securities Co (HSC) said.

Shares of Trần Anh have risen 15.7 per cent this month after speculation around the deal, settling yesterday at VNĐ34,700 ($1.53) a share on the Hà Nội Stock Exchange. According to HSC, Trần Anh’s shares may climb to VNĐ50,000 a share.

Meanwhile, Mobile World’s shares closed at VNĐ105,600 apiece on the HCM Stock Exchange yesterday.

After the first six months of the year, Mobile World Group recorded total revenues of VNĐD31.2 trillion, a year-on-year increase of 59 per cent. Its net profit reached VNĐ1.06 trillion, an annual gain of 28 per cent.

Trần Anh has yet to deliver its second-quarter business results. At the end of March, it posted VNĐ1.05 trillion in net revenue, a decline of 4 per cent from the same period of 2016, and VNĐ2.6 billion in post-tax profit, down 73 per cent year on year. – VNS

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