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Bitter end for acquired firms listing on stock market

In Uncategorized on January 8, 2011 at 4:26 am

Investors always expect that the mergers and acquisitions will bring booming time to their firm’s businesses, but many acquired enterprises are in red after the acquisition. 

Two investors discuss the stock market’s moves at the Ho Chi Minh City Securities JSC (Photo:Minh Tri)

Korea’s retailer Lotte announced its 40 percent stake in Vietnam’s confectionery firm Bibica (BBC), but some brokers said the actual holding is more than 51 percent, which put the Korean firm into the positions of chairman and financial manager in the candy maker’s board of directors.

The acquisition helps boost Bibica’s businesses and competitiveness, analysts said. However, Bibica is still miles behind the confectionery giant Kinh Do (KDC) in term of marketing, which is the most important skill in the candy industry.

Therefore, Bibica may not be among the great deal for both long-term and small-time investors, experts said.

Similarly, beverage firm Tribeco (TRI) incurs constant losses in seven years after Kinh Do bought its control stake. The firm now almost does not stand a chance to compete with both local and foreign rivals, including Tan Hiep Phat and Pepsi. Many brokers, therefore, put Tribeco into “Don’t buy” list.

Brokers and financial experts also pay high attention to mergers and acquisitions of securities enterprises, which are alongside banks to be the two main factors of the financial market.

However, the mergers and acquisitions in the last three years were ineffective as none of brokerages showed any improvement. The competitiveness of brokerages remains low, experts noticed.

“A company failing to beef up its acquired ones’ businesses will struggle to buy control stakes in other firms. Investors are hesitate to buy shares in big earning companies with low dividend rates and share prices treading water,” said a broker of a HCMC-based securities.

Source: SGGP

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