Phân tích hoạt động mua bán sát nhập của các nhà đầu tư nước ngoài tại việt nam trong giai đoạn khủng hoảng kinh tế toàn cầu 2008 2012

VIETNAM NATIONAL UNIVERSITY, HANOI
University of Languages and international Studies FACULTY OF
ENGLISH LANGUAGE TEACHER EDUCATION

Graduation paper

ANALYSIS OF M&A ACTIVITIES OF FOREIGN
INVESTORS IN VIETNAM IN THE GLOBAL
ECONOMIC CRISIS
(2008-2012)

supervisor:

Tran thi lan huong
student:

bui viet nhat thanh
year
enrolment: qh 2009

Ha Noi, April 2013

of


ĐẠI HỌC QUỐC GIA HÀ NỘI
TRƯỜNG ĐẠI HỌC NGOẠI NGỮ
KHOA SƯ PHẠM TIẾNG ANH

KHĨA LUẬN TỐT NGHIỆP

PHÂN TÍCH HOẠT ĐỘNG MUA BÁN SÁT NHẬP
CỦA CÁC NHÀ ĐẦU TƯ NƯỚC NGOÀI TẠI VIỆT
NAM TRONG GIAI ĐOẠN KHỦNG HOẢNG KINH
TẾ TOÀN CẦU (2008-2012)
Giáo viên hướng dẫn: TRẦN THỊ LAN HƯƠNG
Sinh viên: BÙI VIỆT NHẬT THANH
Khoá: QH 2009.


HÀ NỘI – NĂM 2013


ACCEPTANCE PAGE
I hereby state that I: (Bui Viet Nhat Thanh, QH2009.F.1.E20), being a
candidate for the degree of Bachelor of Arts (TEFL) accept the requirements
of the College relating to the retention and use of Bachelor‟s Graduation
Paper deposited in the library.
In terms of these conditions, I agree that the origin of my paper
deposited in the library should be accessible for the purposes of study and
research, in accordance with the normal conditions established by the
librarian for the care, loan or reproduction of the paper.
Signature

Date

i


ACKNOWLEDGEMENTS
It is my pleasure to thank those who made this thesis possible.

Firstly, I owe my deepest gratitude to my supervisor, Ms Tran Thi Lan
Huong, whose encouragement, guidance and support from the initial to the final
level enabled me to develop an understanding of the subject.
Secondly, I would like to thank Dr Nguyen Viet Khoi, The Deputy of
Faculty of International Business and Economics, University of Economics and
Business, Vietnam National University who inspired me to conducting the topic ò
the thesis.
Thirdly, I am heartily thankful to my family, friends especially Mr Duong
Huy Hoang who always encouraged and supported me throughout the process of
doing the thesis and Ms Pham Thi Nhan who kindly helped me to fulfill the format
of the thesis.
Lastly, I offer my regards and blessings to all of those who supported me in
any respect during the completion of the study.

ii


ABSTRACT
The thesis will make clearer the situation of cross-border merger and
acquisition activities in Vietnam in the period of 2008-2012. The term of M&A is
defined and the point of regional and international views toward the definition of
M&A were also added. The trend of the general M&A transaction in Vietnam and
inbound ones were analysed and the study on its impacts would be carried out.
The factors that operated the M&A activities were also introduced in order to
release the analysis and recommendations for the government and domestic
enterprise when they faced with the dozens of foreign-related M&A.

iii

TABLE OF CONTENTS
ACCEPTANCE PAGE .................................................................................................. i
ACKNOWLEDGEMENTS......................................................................................... ii
ABSTRACT ................................................................................................................... iii
INTRODUCTION .......................................................................................................... 1
1. Statement of the problem. ................................................................................. 1
2. Research question(s) or Objectives: ................................................................ 2
3. Significance of the research............................................................................... 3
4. Scope of the study. ............................................................................................... 3
5. Organi zation of the study: ................................................................................. 3
DEVELOPMENT........................................................................................................... 5
CHAPTER 1. LITERATURE REVIEW .............................................................. 5
1. Key concepts. ........................................................................................................... 5
1.1 Merger and Acquisitions (M&A).......................................................................... 5
1.2. Motivations for M&A .......................................................................................... 7
1.2.1 For the buyer side............................................................................................... 7
1.2.2 For the seller side: .............................................................................................. 7

2. Types of M&A deals. ............................................................................................. 8
2.1. A horizontal merger ............................................................................................. 8
2.2. A vertical merger ................................................................................................. 8
2.3. A conglomerate merger........................................................................................ 8

3. Legal framework for M&A in Vietnam ............................................................ 8
4. Related researches.................................................................................................. 9
4.1. Researches of the M&A theory........................................................................... 9
4.2. Researches of Vietnam’s policies for M&A activites in FDI. ........................... 10
4.3. Researches of the M&A situation in the world and in Vietnam ........................ 11
4.4 Reasearches of the M&A’s impacts on Vietnam’s economy ............................. 14

CHAPTER 2: METHODOLOG Y....................................................................... 17
1. Selection of subject ............................................................................................... 17
1.1 Participants.......................................................................................................... 17
1.2 Materials.............................................................................................................. 17
2. Data collection instruments................................................................................... 18
3. Procedures of collecting data ................................................................................ 18
4. Procedures of data analysis .................................................................................. 18

CHAPTER 3: RESULTS AND FINDINGS ....................................................... 20
1. The real situation of M&A activities of foreign investors in Vietnam in the global
economic crisis.......................................................................................................... 20
1.1. Real situation of M&A in Vietnam by value and by deal................................. 20
1.2. M&A by sectors ................................................................................................. 22
1.3 M&A by types..................................................................................................... 24
1.4. M&A by country ................................................................................................ 25
2. The cross-border M&A’s impacts ........................................................................ 28
2.1 Good impacts: ..................................................................................................... 28

iv


2.2 The bad impacts .............................................................................................. 32
3. The factors impacting on M&A in Vietnam ......................................................... 34
3.1 The internal factors: ............................................................................................ 35
3.2 The external factors:........................................................................................... 36
4.
Policies of Vietnamese government and enterprises respond to M&A
transactions................................................................................................................ 39
4.1. Policies of Vietnamese government respond to M&A transactions ............... 39
4.2 Vietnamese enterprises policies respond to M&A transaction ........................... 40

5. Recommendations or suggestions. ...................................................................... 41
5.1. The prospect of M&A activities of foreign investors in Vietnam. .................... 41
5.2. Risks when accommodating M&A from the foreign investors. ....................... 41
5.3. Recommendations for government and local firms to make use of the crossborder M&A deals. ................................................................................................... 42

CONCLUSION ............................................................................................................. 46
REFERENCES ............................................................................................................. 48

v


LIST OF TABLES, FIGURES, CHARTS, AND
ABBREVIATIONS
PAGES
Figures:
Figure 1:M&As continue to help drive the economy

20

Figure 2: Vietnamese M&A deals by number 2011

21

Figure 3: Vietnamese M&A deals by value 2011

22

Figure 4: Transactions numbers by the key sectors

22

Figure 5: Top foreign buyers in 2011 by volume and by value.

25

Figure 6: Foreign Direct Investment from Japan

26

Figure 7: Top 10 deals in four months to 30/4/2012 (USD million) and

27

Top 10 M&A deals in 2011 (USD million)
Table
Table 1: 9M2011 M&A deals by types

24

Abbreviations
Dr: Doctor
EC: European Countries
FDI: Foreign Direct Investment
MNC: Multinational Corporation
TNC: Transnational Corporation
VIR: Vietnam Investment Review
WTO: World Trade Organization
vi

INTRODUCTION
1.

Statement of the problem.
The Vietnamese economy has witnessed the rapid growth since Vietnam

government began more opening and integrating the economy to the world. If we
do not mention the short period that the country was suffered from the Asian
financial crisis, from the late of 1990s to 2007, Vietnam’s economy proved many
good signals of development. Along with the good performance of Vietnam’s
economy, it was the time when the M&A activities surged in the world. In the
2000s, the huge wave of mergers and acquisitions activities experienced variety of
types with vast scales. The M&As have not only increased in the developed
countries but also spreaded all over the world, including the big numbers of
emerging markets, and Vietnam was not the exception.
After entering World Trade Organization (WTO), the prosperity of
Vietnam’s economy has created an open entry for the foreign investors and the
Foreign Direct Investment (FDI) was regarded as a driving force of externally
financing and developing the economy which contributed 18%-20% GDP. There
were two major forms of FDI in Vietnam, namely, Greenfield Investment (GI) and
Mergers and Acquisitions (M&A). Two types of FDI were implemented by
Multinational Corporations (MNCs) and Transnational Corporations (TNCs). In
the early of the integration to the world economy, GI played an important role in
restructuring and fostering the Vietnam’s economy, and for M&A activities, this
type of FDI used to be not popular until the recent years when the world economy
fell into the hole of crisis. Some statistics showed that in 2009, the value of M&A
increased up to one billion dollars and in 2011, the number was five billion
dollars.

1

It is no doubt that the FDI in general and the cross-border M&A in
particular helped Vietnam’s economy develop substantially with a wide range of
modern technologies, financial resources, skilled labors and management,
especially in the ongoing global economic crisis… Nonetheless, how to grasp the
opportunities of cross-border M&As could bring to the nation is not an easy issue.
At the right time, Vietnam needs to have the adequate conditions and the timely
vision as well as effective policies to predict the foreign-related M&A’s trends and
to make use of the benefits of M&A so that avoid unexpected consequences in the
unstable situation of economy.
2. Research question(s) or Objectives:
Firstly, this research aims to provide an overview of foreign investors’
M&A activities in Vietnam, particularly in the period of global economic
recession. To be more specific, a closer look would be taken on how the foreign
enterprises conduct the M&A activities in current situation of Vietnam’s economy
and their driven motivations making these transactions. Secondly, the author will
draw some reactions of both government and the domestic enterprises toward the
train of wave M&A in order to see whether these activities benefit the economy of
country.

Thirdly, then come the recommended measures to boost the foreign

investment through M&A transactions but still obtain the fairness and efficiency.
The study, thus, is expected to provide the material for the researchers in the field
of M&A activities in Vietnam and for the people, especially businessman, who
concern and tend to deal with the M&A transactions at this time.
In brief, these objectives would be achieved by addressing four following
research questions:
1. What is the trend of M&A activities of foreign investors in Vietnam at the

time of global economic crisis? And how do these M&As impact on the
economy of Vietnam?
2. What are the internal and external factors that affect this trend?
2


3. How do the government and the domestic enterprises react to this massive
wave of M&A activities?
4. What are the recommendations for Vietnamese government and enterprises
to take advantage of the M&A activities of the foreign investors?
3. Significance of the research.
Once having been completed, the thesis would considerably contribute to
provide the useful overview of the current foreign-related M&A activities in
Vietnam. The enterprises who are going to tackle with the inbound deals could
have a general analysis of the M&A situation. Furthermore, the people who are
interested in cross-border M&A deals such as economic students, teachers,
researchers… might use this thesis as the reliable source for references.
4. Scope of the study.
The scope of this study has been made clearly in the title “ Analysis of the
M&A activities of the foreign investors in Vietnam in 2008-2012”
Firstly, the study is aimed at defining what the mergers and acquisitions is and
investigating their features and the factors that obviously affect this type of
investment in Vietnam.
Secondly, there are certain time and space bounds in this thesis. The author
just viewed the foreign-related M&A deals in Vietnam and in the period of
2008-2012 only.
This paper has finally figured out the recommendations for developing the
economy in Vietnam, closely basing on the restricted context and purposes.
5. Organization of the study:
The paper is structured as following three chapters:

Chapter 1 – Literature review – provides the profound definition of key concepts,
theories, and discussions of related studies.
3


Chapter 2 – Methodology – introduces selection of subjects, data collection
instruments, data collection procedures, data analysis methods and data analysis
procedures.
Chapter 3- Findings and Results- presents the analysis and gives the own findings
to answer the research questions and suggests some recommendation for the
situation.

4


DEVELOPMENT
CHAPTER 1. LITERATURE REVIEW

1. Key concepts.
1.1 Merger and Acquisitions (M&A)
Organisation for Economic Co-operation and Development (OECD)
defined that M&A was the abbreviation of the phrase “ Mergers and
Acquisitions”. This term was used to define the process of purchasing, taking
holders or assets between two companies or more.
Although the term “M&A” is widely used in many countries in the world;
however, there is no common legal definition of M&A. It depends on each nation
which has its own legal framework and the understanding about M&A.
1.1.1 Definition of United States:
According to the US’s legal framework, mergers mean the combination of
two companies. There is one company is completely acquired by the other. The

one that is less important than the other will lose their characteristics and become a
part of the bigger company. The merger activities make the acquired company
take the back seat in the system and give the rights, legal interests and
responsibilities to the acquiring one. Contrast to the merger activities, the
consolidation activities mean both companies will lose all their own characteristics
and build up a totally new company. (Phung, N,V,N., 2012, p.2)
1.1.2. European Community (EC):
EC has set a detailed definition of M&A written on the EC Merger
Regulation No.139/2004, dated in 20 th January, 2004: (i) The merger is carried out
by two separated entities or two parts of two legal entities or (ii) to take over the
5


direct/ indirect management via buying the market shares or assets from another
company; (iii) or set up a new joint venture company. The EC Merger Regulation
introduced the formula to calculate the revenue, necessary procedure in order to
implement the merger and acquisition in the detailed ways.
Although the legal systems of each nation in the EC are not similar, the EC
Merger Regulation is commonly applied and it is the paper that has the higher
impacts than the national laws. (Phung, N,V,N., 2012, p.2)
1.1.3. Definition of Vietnam
- Definition of Merger:
+ Article 17 in the Competition Law: A company or a number of
companies transfer all its/their assets, rights, liabilities, and legal interests to
another company and ended the former existence.
+ PricecooperWater ( M&A Asian Tax Guide, 2012, p.261) views
merger as “Under Vietnamese regulations, one or more companies of the same
type can be merged into another company by way of transferring all assets, rights,
obligations and interests to the merged company and, at the same time, terminate
the existence of the merging companies”

- Definition of Acquisitions:
+ Article 17 in the Competition Law: “ One company purchases the whole
or a part of another enough to take control, exclusively manage all or one business
activity in the bought company”
+ PricecooperWater ( M&A Asian Tax Guide, 2012, p.259) : “Acquisitions
in Vietnam can be structured as a share or asset deal. In the case of an asset deal, a
foreign purchaser would generally have to establish a new subsidiary in Vietnam”
The definitions of M&A in the different legal papers do not go well with
each others. Specifically, according to the Enterprise Laws 2005, the companies

6


that carry out the M&A activities must be in the same type of business; however,
the Competition Laws 2004 did not mention this phrase.
1.2. Motivations for M&A
1.2.1 For the buyer side
- Cut-down cost of business: M&A activities help the buyers minimize the
cost of dong business such as seeking for the new customers, expanding the
market, building up and developing the trade mark,…
- Vertical expansion: the company can control the whole or a part of
supplying chain so as to gain benefits of products’ input and output.
- Complementary resource: M&A activities contribute to make use of and
share the available resources. For example, sharing the experience while doing
business, making use of the researches’ results, or even taking advantages of the
selling distribution system. One more thing is that verifying the business will
create the new opportunities of business and help this company easily change the
investment direction.
- Economic scale: it happens when a company implements the M&A
activities with its rival in the market. By M&A, the company not only eliminates

the rival but also creates the larger position of competition. They can conduct price
squeeze or monopoly to set up the price for their products.
- Cross-selling: Companies can make use of the services of each other to
increase the services for the customers and then increase revenues, or protect the
relationship with the customers.
-Taxes: A company which is developing can buy out a loss one to enjoy the tax
deduction.
1.2.2 For the seller side:
The sellers have the same motivations as the buyers. Moreover, the other
motivations in the M&A market are that: (i) coping with the competitive market,
7


(ii) being attracted by the offers of the buyers, (iii) looking for the strategic
partners and so on.
Of the above motivations, seeking for the strategic partners reveals the
activeness of the sellers, and this is also the main motivations of Vietnam
enterprises in order to protect themselves again the waves of integration and free
trade nowadays.
2. Types of M&A deals.
According to Bertrand, A., (2004), there are three types of M&A: (i) Horizontal
merger, (ii) vertical merger), (iii) conglomerate merger.
2.1. A horizontal merger
This type of merger occurs when two competitors combine, i.e. two
companies having the same activity (e.g. two companies in defense industry).
Such a combination may result in an increased market power for the merged
company and, consequently, may be opposed by antitrust regulators.
2.2. A vertical merger
This type of merger is the combination of two companies with
complementary activities such those having a buyer-seller relationship (e.g. an

operation between a pharmaceutical company and a company which specializes in
the distribution of pharmaceutical products).”
2.3. A conglomerate merger
This type of merger relates to all the other types of transactions, i.e. when
two companies do not have a specific relationship and are usually in different lines
of business (e.g. a tobacco company merging with a food company).
3. Legal framework for M&A in Vietnam
The legal regulations for M&A in Vietnam are gradually accomplished.
Many regulations have been adopted to create a favourable environment for the
8


international investment. The transparency would be strengthened and open a gate
for enterprises to approach the modern technologies.
- The Law on Enterprises and the Law on Investments in 2005: Greatly
clarified and modernized the regulatory framework.
-The Law on Securities No. 70/2006/QH11 dated June 29, 2006, as
amended by Law No.62/2010/QH12 (Law on Securities, 2010), and its
implementing and guiding regulations, regulate the acquisitions of shares of a
public company in Vietnam. Circular 194/2009/TTBTC dated October 2, 200 9
(Circular 194), in particular, governs public tender offers.
-

Decree No. 122/2011/ND-CP passed by the government

dated 27

December 2011 providing a number of amendments to the prevailing Decree No.
124/2008/NDCP dated 11 December 2008 on corporate income tax.
- Decree 121/2011/ND-CP passed by the government dated 27 December

2011 providing amendment of and supplement to Decree No. 123/ND-CP dated 8
December2008 on Value Added Tax (VAT).
- Decree 51/2010/ND-CP passed by government dated 14 May 2010 on
invoices.
- Circular 28/2011/TT-BTC passed by the Ministry of Financial dated 28
February 2011 on tax administration.
- Circular No. 186/2010/TT-BTC passed by the Ministry of Finance dated
18 November 2010 providing guidance for profit repatriation by foreign investors.
4. Related researches
4.1. Researches of the M&A theory
There are many studies raised and addressed many questions to give an
understanding of M&A activities in Vietnam. Many of the outstanding researches
are 1) Phung, N.V.N., (2012) “Hoan thien phap luat ve sat nhap va mua lai doanh
nghiep (M&A) phu hop voi cac cam ket quoc te cua Viet Nam”, Master Thesis,. 2)
9


Nguyen, T.N.D., (2012) “Mua ban sat nhap – Con duong de cac doanh nghiep
Viet Nam phat trien”, No.08, Dong A University,. 3) Bertrand, A., (November,
2004) “Mergers and Acquisitions (M&As) Greenfield investments and Extension
of capacity”, DITEG.
These studies have made the definition of M&A clearlier by taking a zoom
in the differences between mergers and acquisitions, the types of M&A and the
motivations for M&A activities. Bertrand, A (2004) provided an overview of
M&A so that the readers would gain a deep understanding about what the M&A
really is. Phung, N.V.N., (2012) then gave us the information and analysis of the
legal framework for M&A in Vietnam and Nguyen ,T.N.D., (2012) brought a
hopeful future for Vietnam enterprises in terms of M&A activities.
Nevertheless, it still remains some issues that could not be handled
successfully in these studies. An overview of M&A was given, both the inbound

and outbound deals were reviewed, but the statistics and analysis of the cro ssborder M&A was not fully viewed because in the coming time the cross-border
M&A is promising in Vietnam’s market. The thesis was meant to clarify and
analyze more about these issues.
4.2. Researches of Vietnam’s policies for M&A activites in FDI.
Some researches mentioning Vietnam’s legal frameworks and policies are
in the following list: 1) Phung, N.V. N., (2012) “Hoan thien phap luat ve sat nhap
va mua lai doanh nghiep (M&A) phu hop voi cac cam ket quoc te cua Viet Nam”,
Master Thesis. 2) Nguyen ,T.N.D., (2012) No 8. “Mua ban sat nhap – Con duong
de cac doanh nghiep Viet Nam phat trien”, Dong A University,. 3) The Law on
Enterprises and the Law on Investments in 2005. 4) The Law on Securities in
2006. 5) SEIKO IDEAS (May 28, 2012), volume 3, “Vietnam news collection”. 6)
Linh San (May 2012) “Target Soughts”.
By seeing such researches and legal papers, there are some things
remarkable to mention. Although some obstacles still remain, Vietnam has set a
10


favorable legal framework for the M&A activities, especially for the international
M&A. The laws are constantly studied and accommodate the recent trends of the
M&A in the country and open a gateway for FDI-related enterprises.
However, although some drawbacks for M&A activities to develop in
Vietnam were introduced by Nguyen, T.N.D., (2012), there were no solutions or
the policies of Vietnamese enterprises and government.

To suggest how

Vietnamese government and domestic firms get full benefits from the inbound
deals, SEIKO IDEAS (2012) highlighted some suggestions for the government
and the investors, both the domestic and the international ones. They said that the
most effective resolutions were to renew the legislation and strengthen the

financial operation. The policies were even improved but still could not be
predicted. Having the same points, Linh San (2012) added that the stabilization of
the economy played the most important role in attracting the foreign investors and
the low infrastructure which was also one of their big concerns. Mr Stephen
Gaskin, Deputy General Director of PwC Vietnam (2012) also considered the
adequate levels of Human Resource, IT and operations as “the significant
challenges” that the international investors needed to pay due attention to.
This research paper collects the views of above studies and reports and then
has its own analysis and recommendations for the better performance of Vietnam
economy in terms of the M&A activities conducted by foreign investors. A deeper
analysis would be made in the research.
4.3. Researches of the M&A situation in the world and in Vietnam
Concerning with the real situation M&A activities in the world in general
and in Vietnam in particular, the following studies proposed many noticeable
views. 1) Nguyen, V.Q., (2012) “Tricks of the trade:

A guide for M&A in

Vietnam, 2012”, Tileke and Gibbins,. 2) “Reveal some huge deals”, Baodientu.
Vn. 2013 3) KPMG (2011) “Taxation of Cross-border Mergers and Acquisitions”,.
4) United Nations (2012) “World Economic Situation and Prospects 2012”. 5)
11


Zachary, R.M., Matthew,C., Cathy, C., (Sep 27, 2012 ) “M&A Slumps to Lowest
Level Since Financial Crisis’s Nadir”,
In general, the global economic crisis in the recent time dramatically
impacts on the national economy and leads the business behaviors, especially the
M&A activities, into the common trends. According to United Nations (2012) the
global economic outlook was still in the downward trend. This report showed that

the shadow of economic crisis covered from the developed economy to newly
emerging and transitional ones. The bad affects fed on every corner of the
economy around the world and the M&A activities were not the exception.
Because of the slowdown economic growth, M&A revealed many signs of notably
declining in both volume and number of deals, and the recession M&A bottomed
up the level that had never happened before, according to Zachary, R..M;
Matthew. C., Cathy.C (2012). The article also indicated that although the M&A
activities were sluggish, cross-border deals which were implemented in AsiaPacific was still on the rise. With some advantages like “long capital, cheap global
assets”, Asia attracted a lot of international deals and Vietnam’s market is also in
the eyes of the investors.
However, because of the distinguishing geography, culture and business
customs, the reactions of M&A activities are quite different in every single nation.
Making an effort to have a comprehensive understanding of the current M&A
activities in Vietnam, many studies focused on the common trends of M&A deals
in the country and then gave an overview as well as the suggestions for the
situation, whilst , some other researches made a zoom in the foreign-related M&A
activities in Vietnam, with the purpose of achieving the most accurate analysis.
The better recommendations for the development of Vietnam’s economy will
come right after.
Concerned with the recent M&A situation in Vietnam, Nguyen, Q.V (2012)
noticed that although Vietnam’s economy was suffering the global recession, the
12


number and value of M&A in Vietnam were constantly high with the foreign
participation and the biggest obstacle for foreign investment were the local
characteristics of Vietnam market and inadequate level of legal regulations in
Vietnam. From 2008 to 2011, in the period of global recession, there were a steady
increase in both volume and value of completed deals.
Mr. Vinh also added that the deals were almost taken by foreign

corporations not the domestic ones. Vietnam’s population is numerous and the
country with a large and developing market attracted even more foreign investors.
Moerover, the local companies were devalued and the reasons were 1) the
economic crisis drove the companies and assets into the distressed situation 2) the
boom of foreign indirect investment in 2006 and 2007 made the shares available
for sale 3) state-owned enterprises were directly managed

by government

therefore the shares and assets fulfilled the market. Although the cross -border
deals seemed to be go up, there were no many successive deals. Dr. Vinh believed
because the investors did not pay enough attention to the domestic market so they
could not evaluate precisely the valuation of company. Some unfavorable
conditions of law and targeted firms hugely made the deals fail or delay.
Other report of KPMG (2011) indicated the similar point. This report also
reminded that the lack of guidance in law to help the corporation prepare and carry
out the M&A schedule and process. Another drawback was the transparency in
Vietnam. The international firms found difficulties in giving the evaluation of such
legislation.
Despite some disadvantages that the international firms coped with, the
developing economy was still attractive to the foreign-related companies and there
was no doubt that inbound deals would be on the top of M&A activities. One of
the biggest countries kept investing in Vietnam via M&A was Japan, this country
has been on the top of volume and value deals. At the second and third ranks were
Korea and Thailand respectively.
13


In the report “Reveal some huge deals”(2013), the total value of the deals
was approximately 2 billion US and it was clear that the number of deals went

down in 2012 in comparison with 2011 but the value was much bigger and more
notable. In the early of 2013, the M&A market is looking forward to a deal that is
considered the biggest purchase ever implemented by Mitsubishi Tokyo UFJ (
Japan). This bank will be acquiring 20% stake of Vietinbank by Q1/2013. The
article also pointed that the Food and Beverage, Consumption, Infrastructure
sectors are still on the eyes of the investors in the coming time, no regard of the
reality that these sectors easily get damaged from the inflation.
FDI inflows to Vietnam till 2020 and the foreign-related M&A would surge
in the coming time and many enterprises run by government would be acquired,
therefore, the domestic companies were considering admitting the M&A deals
with the international corporations.
Such analysis in these researches provided quite full information of cross border M&A situation in Vietnam. These researches drew a detailed and
comprehensive view for the foreign-related deals in the country and the thesis was
aimed to make these points clearer.
4.4 Reasearches of the M&A’s impacts on Vietnam’s economy
The impacts of cross-border M&As are not clearly realized in the short
term on the troubled economy, but in the long term, the most important
contributions of cross-border M&A are that the operation of economy is
restructuring and the physical and financial resources were re-allocated more
productively. There are some researches concerning to these impacts: 1) Wang,
M., Wong, M.C., ( 2009) “What Drives Economic Growth? The Case of CrossBorder M&A and Greenfield FDI Activities," Kyklos, Wiley Blackwell, vol. 62. ,
2 Leproux, V., Brooks, D.H. (2004) “Vietnam: Foreign Direct Invesment and
postcrisis regional integration” Asian Development Bank. 3) Vuong, Q.H., Tran,
T.D., Nguyen, T.C.H., (2009) “Mergers and Acquisitions in Vietnam's Emerging
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Market Economy, 1990-2009” Centre Emile Bernheim 4) César, C., Norman, L.,
Luis,S., (2004) “Greenfield Foreign Direct Investment and Mergers and
Acquisistions: Feedback and Macroeconomis Effects”, World Bank.

Discussing the vital role of inward flows of FDI to the Vietnam economy, Leproux
and Brooks (2004) indicated that it was how successfully the country coped with
the slowdown economy, the difficulties in politics and institution so as to help the
country absorb and take advantages of the FDI.
According to Vuong, Q.H., et al (2009) , many economists showed that
inward FDI was extremely vital for the country’s economy. The importance was
expressed in such aspect: (i) Financial resources were provide (ii) the developing
economy of Vietnam was hugely financed (iii) exports were provided the
favorable condition to increase, (iv) the quality of the labor market was improved,
many high technologies were introduced and applied by the domestic enterprises,
especially the skills of labor was extremely elevated.
There are two different types of FDI in Vietnam, namely, greenfield
investment and M&A. When distinguishing these types of FDI, César,C.,
Norman,L and Luis,S (2004) supposed that:
“The other difficulty concerns the lack of distinction between greenfield
FDI and M&A. Since the former involves mainly (although not only) new capital
assets, while the latter is just a transfer of existing ones, greenfield FDI would
seem more likely to affect growth -- if at all -- via increased physical investment,
while M&A FDI would be more likely to do so via enhanced productivity growth.
In fact, the increased importance of M&A in total FDI flows in recent years has
been singled out as the likely cause of an observed weakening in the empirical FDI
investment link in the 1990s (World Bank 2001). Thus, failure to disti nguish
between the two types of FDI flows in the face of large changes in their relative
magnitude – such as those witnessed over the last decade – could bias the
inferences on the relationship of total FDI with investment and growth.”
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The relationship between Greenfield investment and M&A make Wang and
Wong (2004) raise a question” Is Greefield Investment preferred than M&A?”

and in the situation in Vietnam, they gave us the answer that it depended on how
good and adequate preparation and the human resources were. According to
Calderon et al (2004), since 1990s the rapid growth of M&A had been seen
clearly, and Vietnam’s situation was not exception. “Foreign direct investment
(FDI) toward launching entirely new businesses, or so-called “greenfield”
investments, reached only $13.1 billion in term of new commitment and $10.5
billion in term of disbursement, down 15.3 per cent and 4.9 per cent respectively.
However, there have been an increase of FDI in the country through cross-border
M&As during the year, according to the Ministry of Planning and Investment”
“M&A bright images appear” (21 st January, 2013) reported by Ngoc Linh.
Actually, the flow FDI in Vietnam was mainly via Greenfield Investment
mode in the past years and continued to “serve as driver of FDI inflows”, Nguyen
Mai, chairman if Vietnam Association of Foreign Invested Enterprises said, yet, in
recent time, the cross-border M&A activities would become more and more
significant.
Summary: In this chapter, the theoretical foundation of M&A activities are
generalized. These above studies have almost systemized and given the analysis of
cross-border M&A situation related to FDI in Vietnam. Some drawbacks for
M&As were also mentioned and the policies of government to give an entry for
the foreign investors were introduced. However, some of the researches were not
updated, many unsolved problems remained, especially, the cross-border M&A
situation in Vietnam in the period of 2008-2012 was still not systemized. Thus, the
thesis will meet these necessities and provide much more comprehensive analysis.

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