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TTC Sugar to take over BHS in a 300m share swap merger

Update: May, 26/2017 - 10:13
Thành Thành Công Tây Ninh Sugar JSC (TTCS) will make a share swap to fully acquire Biên Hòa Sugar JSC in order to create the biggest sugar producer in Việt Nam. — Photo

HÀ NỘI — Thành Thành Công Tây Ninh Sugar JSC (TTCS) will make a share swap to fully acquire Biên Hòa Sugar JSC in order to create the biggest sugar producer in Việt Nam.

TTCS will issue nearly 304 million shares to convert all outstanding shares of Biên Hòa Sugar at a ratio of 1:1.02. In other words, each share of Biên Hòa Sugar is equal to 1.02 shares of TTCS.

The conversion ratio was calculated by a third-party company that valued each share of TTCS and Biên Hòa Sugar at VNĐ20,944 (93 US cents) and VNĐ21,356, respectively.

The share swap will help TTCS take total control of Biên Hòa Sugar’s capital. The deal will be carried out within 90 days plus additional time (if needed), starting from the day TTCS receives the permit from the State Securities Commission on share issuance.

The merger will increase the chartered capital of TTCS by more than VNĐ3 trillion ($133.3 million) to VNĐ5.57 trillion.

After the merger is completed, Biên Hòa Sugar will be renamed to Thành Thành Công Biên Hòa-Đồng Nai Sugar Co Ltd to marks TTCS’s sole ownership of the company.

TTCS expects its combined revenue will reach VNĐ8.35 trillion after the merger, and its combined pre-tax profit will tap VNĐ674 billion.

The merger is also expected to help TTCS accrue a 30 per cent market share in Việt Nam. The new company will have total assets of VNĐ14.67 trillion and total payable assets of VNĐ7.86 trillion.

TTCS shares, listed as SBT on the HCM Stock Exchange, are trading near the all-time high of VNĐ29,000. SBT closed Thursday at VNĐ28,450.

Shares of Biên Hòa Sugar are listed on the same bourse as BHS and also move around the all-time high of VNĐ20,000. BHS ended Thursday at VNĐ20,050.

TTCS chairman Phạm Hồng Dương said at the company’s extraordinary shareholder meeting held on Thursday that the M&A between the two firms will help TTCS heighten its position in the sugar market and improve its quality of financial management, corporate governance and business operations.

The merger will combine good qualities of two sides, which include a strong retail network and good reputation for Biên Hòa Sugar and good production for TTCS, Dương said. He also said that the post-merger company will be able to create more added values and reduce its total cost.

According to a report presented by Bảo Việt Securities (BVSC) at the meeting, the post-merger company will have 40,000ha of total planting area, equal to 16 per cent of total sugarcane area across the country.

The brokerage also said that the post-merger company will have an average annual growth rate of 6.6 per cent, while doubled capital will help the new firm negotiate with suppliers to reduce input costs.

In addition, TTCS will be able to share the retail network of Biên Hòa Sugar to slash its selling cost and increase its profit, resulting in the rise of price of company’s shares and benefiting its shareholders. — VNS

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