Kinh Do Corp., Vietnam's biggest listed confectioner, will acquire North Kinh Do Food Joint-Stock Co. and Ki Do Joint-Stock Co. to cut costs and compete with rivals including Kraft Foods Inc. and Godiva Chocolatier Inc.
Kinh Do will issue about 13.7 million shares to the stockholders of North Kinh Do in exchange for a 100 percent stake, Deputy Chief Executive Officer Le Phung Hao said. Kinh Do will also issue 4.5 million shares to Ki Do holders in exchange for the 72 percent stake the Ho Chi Minh-based company doesn't already own, he said.
"The mergers will help us take advantage of each others' technology and distribution network to develop products that can compete with European companies," Hao said Monday in a telephone interview. He said he expects the transaction to be completed within three months.
Vietnam's 86 million people are spending more on food, fueling 17 percent annual growth in the food industry, Hao said. The increase is also pushing up demand for imported confections including Kraft biscuits and Godiva chocolates, he said. The government raised this year's economic expansion target to 6.5 percent from 5.3 percent as the global and domestic economies recover.
Kinh Do sank as much as 4.7 percent to VND50,500 before trading at VND51,000 at 12 p.m. in Ho Chi Minh City. The shares have more than doubled over the past year, compared with a 43 percent advance in the benchmark VN Index.
Kinh Do also plans to acquire Vinabico Confectionery Joint- Stock Co. next year, Hao said.
Each North Kinh Do and Ki Do share will be converted into one Kinh Do share at a ratio of 1.1 to 1, according to Hao.
Kinh Do forecasts pretax profit this year to rise about 49 percent from the previous year to 850 billion dong ($44.7 million).
North Kinh Do targeted a pretax profit increase of 33 percent this year to VND160 billion, and a 31 percent rise in 2012 to VND210 billion, according to North Kinh Do General Director Tran Quoc Viet.
Ki Do forecasts a 10 percent increase in pretax profit this year to 55.7 billion dong from VND50.5 billion last year, said Tran Quoc Nguyen, Ki Do's general director.