This Wednesday, Vietnam’s number-one dairy giant Vinamilk officially offered to by nearly 47% of GTN shares of GTNfoods. Accordingly, GTN shares continued to trend upwards, up to above VND 18,000 per share, a 2-year record high.
In our previous news, GTNfoods is one of the successful agriculture start-ups. Via M&A, GTNfoods is currently owning 3 well-established agriculture giants Moc Chau Milk, Vinatea and Dalat Wine. More specifically:
Mộc Châu Milk is now possessing a 1,000-ha grazing area with 23,500 cows. Moc Chau Milk production is up to 100 thousand tons of fresh milk per year. The Company has adopted the farmer partnering business model with total of partnering household farming area of 3,000 ha. Moc Chau Milk accounts 23% market dairy share in the Northern parts, only ranking after Vinamilk.
Moc Chau Milk’s strengths lie in the large-scale grazing area, fertile soil and self-contained milk production system from feed materials to finished products whereas its yet-to-be-resolved weakness lies in distribution expansion beyond the Northern parts.
Vinatea is now Vietnam’s leading tea manufacture with a 4,700-ha agricultural land. Vinatea provides 10,000 tons of tea in the market per year. The thing is that upon restructuring, the company has improved its planting areas that are awarded with Rainforest Alliance certificate of sustainable agricultural development. Simultaneously, Vinatea has also enhanced its product quality. Accordingly, Vinatea started to export to high-demanding markets and has got its products flying off shelves.
Vinatea’s weakness is that all is about a new start with moderate revenues and profits.
Dalat Wine is inherited from Lafaro French winery built in the 19th century. Ladofoods launched its Ladora Winery and officially became the Southeast Asia’s largest wine producer with the modern production process in accordance with the European’s leading wine producing technology standards.
Given GTNfoods’ strengths, that Vinamilk eyed GTNfoods for M&A is understandable as Vinamilk is aiming to create a distinguished market shares from other dairy companies. Moreover, in the Northern parts, Vinamilk has yet to have any grazing areas. Thus, the M&A of GTNfoods is considered as a springboard for Vinamilk to cut down on its transportation costs from other areas to reach larger areas of Hanoi and its vicinity.
In our discussion, Mr. Lai Cao Le, GTNfoods’ senior advisor, Vilico and Vinatea’s BoD chairman stated that, GTNfoods management warmly welcomes shareholders who desire to own GTN shares and join the company. Mr. Le further said that given its advantages in terms of brand and material areas, it is understandable that GTN shares draw investors’ attention. The company’s management is very pleasant that GTN share prices are on a rise and GTNfoods are valued higher in the stock market.
In a reply to a question concerning its view on Vinamilk’s public offer to buy GTN shares, Mr. Lai Cao Le told that the company management has held many discussions and ended up reaching consensus in this regard.
“GTNfoods management has discussed with a number of major shareholders who all hold about 51% of equity stake in GTNfoods to understand their view and desires. The majority of these shareholders agree that GTNfoods have more competent shareholders in the sector who could join and partner with the company to develop the existing assets”, said Mr. Le.
Mr Le stated that the after working with many shareholders to figure out whether they want to hold or sell GTN shares as offer prices are lower than market shares, the company find that the majority of shareholders will hold their existing shares with view to joining the company in a long run.
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