Vietnam to Sell Habeco Stake at Market Price, Official Says

(Bloomberg) -- Carlsberg A/S, the Danish brewer negotiating to buy a majority stake in Hanoi Beer Alcohol Beverage Corp., must pay market price if it wants to acquire Vietnam’s second-largest beer maker.

Carlsberg and the Hanoi-based beer maker, also known as Habeco, are working out “issues” in negotiations for the European company’s efforts to expand its stake in the brewer, Deputy Prime Minister Vuong Dinh Hue said in an interview. The European beer maker wants to increase its Habeco stake to 61.79 percent from 17.51 percent in the Hanoi brewer, Tayfun Uner, former chief executive officer of Carlsberg Vietnam, said in late 2016. 

Vietnam is accelerating efforts to offload stakes in companies it owns to narrow a fiscal deficit. The sale of shares in Habeco comes after Thai Beverage Pcl partnered with a local company to buy a $4.8 billion majority stake in the nation’s top brewer Saigon Beer Alcohol Beverage Corp., or Sabeco, in December.

“To set the initial prices for these stake sales, the government will base the prices on the 20 most-recent trading sessions of the shares,” Hue said in Hanoi. “These companies are not allowed to sell below the floor prices that the government set.”

‘Good Faith’

The European brewer’s negotiations with the government and Habeco “have been characterized by good faith on all sides,” Carlsberg Vietnam said in a statement.

“Carlsberg is supportive of the government’s privatization agenda and has endeavored to serve as a partner for the government as it has worked through the Habeco divestment process, which is substantial and legally complex,” it said. “Accordingly, Carlsberg would reaffirm its support for the divestment goals and principles put forward by the government, which includes divestment at a fair price.”

Uner said in 2016, when he was running Carlsberg’s Vietnam operations, that the Hanoi brewer’s price on the regulated over-the-counter exchange didn’t accurately reflect the underlying value of the company because of speculative buying on a small volume. Habeco is now traded on the Ho Chi Minh City Stock Exchange.

More Shares

Carlsberg is also seeking to acquire a further 20 percent stake that the government will sell at an auction, Uner said. Foreign investors can have a stake of no more than 49 percent in conditional sectors, which include alcohol companies, unless the government grants an exception. Carlsberg said Uner’s comments were outdated and declined to disclose further details on current talks.

Habeco did not immediately respond to a request for comment.

Habeco shares have risen 57 percent in the past six months, exceeding the 38 percent gain in Vietnam’s benchmark VN Index. The brewer trades at 41 times estimated earnings for the next 12 months, compared with 33 times for Sabeco -- and about twice the valuations of Carlsberg and other global brands including Kirin Holdings Co. and Heineken NV.

Tough bargaining

Vietnam is sending a message to investors that it will bargain hard to get the highest price for government assets, especially those considered to be “crown jewels” -- Sabeco in December and now Habeco, said Marc Djandji, head of institutional sales at Viet Dragon Securities JSC in Ho Chi Minh City.

“These are the crown jewels and they are not going to go for a discount and that’s understandable,” he said. “We can expect the same for the other large state-owned companies that are going to come online.”

Shares of Habeco rose for the first time in four days, climbing 2 percent at the close of trading in Ho Chi Minh City while the benchmark VN Index increased 2.4 percent.

The Danish brewer is looking to expand its presence in Vietnam, whose growing middle class and youthful population helped drive a 300 percent surge in beer demand since 2002, according to Euromonitor International.

Vietnam plans to sell its stake in Habeco in the first quarter this year, according to Ministry of Industry and Trade. The ministry is expected to submit the central government a detailed plan on the price, size of the stake and the timing for the sale after concluding talks with Carlsberg, Hue said.

“We have planned to sell Habeco since last year, but there are some issues between Habeco and its current strategic investor,” Hue said. “Habeco and Carlsberg are going through terms in their strategic partnership contract to properly resolve the issues and to make sure the deal must follow market mechanism while also complying with the signed contract” between the two, he added.

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