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Baker Kinh Do to take over smaller rival

Update: April, 25/2012 - 10:02

HA NOI — Shareholders of commercial bakery company Kinh Do (KDC) have approved a plan to merge with HCM City-based Vinabico Confectionery Company.

KDC currently holds a 51.2-per-cent stake in Vinabico, which has a charter capital of VND50 billion (US$2.3 million).

Under the plan, 2.2 Vinabico shares would be exchanged for one KDC share, with KDC issuing over 1.1 million new shares to complete the acquisition. The merger plan would become official if approved by Vinabico shareholders when they meet this Friday.

Following the merger, Vinabico would be restructured as a limited liability company wholly owned by KDC. The merger, according to the deal's consultant Bao Viet Securities Co, would help increase KDC's scale of operation, while improving operational efficiency for Vinabico through its counterpart's branding and network.

KDC chairman Tran Kim Thanh said, "Vinabico has the same growth rate of 30 per cent as our company, so the merger will create mutual kinetic energy."

In additon to KDC, the State Capital Investment Corporation holds an interest of 14.65 per cent in Vinabico, while HCM City Securities Co holds 12.35 per cent. According to audited financial statements, Vinabico posted a profit last year of nearly VND13 billion ($619,000).

Kinh Do aims to increase its charter capital to VND1.67 trillion ($79.5 million) by the end of this year. It also targets a revenue of VND5.5 trillion ($261.9 million) and a gross profit of VND500 billion ($23.8 million), up 30 per cent and 43 per cent from last year's level, respectively. — VNS

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