Masan Beverage currently holds a 68.46% stake in Vinacafe, and is in the process of acquiring over 8.38 million shares to take it to the full 100%. The company is said to have spent about 1.7 trillion dong (US$74.6m) on the deal.
Before the acquisition by Masan Beverage is complete, Gaoling Fund LP owns 23.33% of shares while small shareholders account for 8.2%.
Investing further in the coffee segment
Masan Beverage is a subsidiary of Masan Consumer Holdings of the Masan Group. In 2011, it acquired a controlling stake in Vinacafe to enter into the coffee market.
Masan Beverage also has a 65% stake in Quang Ninh Mineral Water Company and 63.9% stake in Vinh Hao Mineral Water Company, and produces carbonated drinks, juices and ready-to-drink tea.
The full acquisition of Vinacafe reflects Masan Beverage’s belief that coffee and coffee products will be one of the cornerstones of the beverage industry, and is seeking to develop "high added value" products.
“Vinacafe Bien Hoa has successfully expanded the brand name Wake-up 247 — a ‘strengthened’ coffee energy drink — currently occupying fourth position with a market share of about 5% in the energy drink industry in Vietnam, reaching a 58.3% growth rate in the first nine months of 2017,” said Masan Beverage.
“It (Vinacafe) has confirmed its ability to expand in the industry through innovation and Masan's nationally-effective distribution platform.”
Further growing business and profits
Aside from significantly improving net margins, the complete acquisition is expected to simplify Masan’s group ownership structure and further consolidate cash flow, allowing the company to meet its target debt to EBITDA ratio of below two times within the next three years.
In the period of 2012-2016, Vinacafe Bien Hoa reportedly achieved a growth rate of 12% per year, with improved profit margin from 27.6% to 36.2%.
Masan Beverages expects this consolidation to further grow business in the beverages and coffee segments, and profit margins.
Vinacafe Bien Hoa was founded as the Coronel Coffee Plant in 1969, which created instant coffee brand Vinacafe. It was later acquired by the Vietnam National Coffee Corporation (Vinacafe).
According to a Nielsen Vietnam report, Vinacafe is the leading instant coffee manufacturer in Vietnam with a 41% market share.