SK Group to Acquire $470 Million Stake in Masan

(Bloomberg) -- SK Group is acquiring the largest foreign stake in Masan Group Corp. for about $470 million, in a deal that will value the Vietnamese diversified business group at about $5 billion.

The South Korean group, which has businesses ranging from telecommunications to service sectors, will buy Masan Group’s entire 109.9 million treasury shares for 100,000 dong ($4.29) each, the companies said in a statement. SK Group will appoint a member to Masan’s board of directors.

The acquisition, equal to a 9.5 percent stake in Masan Group, will make SK Group the largest foreign shareholder in the Vietnam conglomerate, whose principal businesses include food and beverages, financial services and natural resources. The next biggest foreign holder is GIC Pte, Singapore’s sovereign wealth fund which holds a 4.99 percent stake, according to data compiled by Bloomberg.

The two companies “will actively pursue strategic M&A opportunities to deliver exponential growth over the long-term,” Danny Le, head of strategy and development for Masan Group, said in a statement. “We admire how SK Group has evolved into a global diversified powerhouse.”

Vietnam is “an important foundation” for SK Group’s regional strategy, Woncheol Park, representative director of Southeast Asia Investment for SK Group, said in a statement. “We will actively work together to identify strategic opportunities to expand into attractive categories in Vietnam where SK can add significant value through our know-how and technology. We believe this is the first of many investments with Masan.”

Credit Suisse Group AG acted as adviser for Masan Group. The deal is expected to close in the fourth quarter, Masan said.

The proceeds will be used to finance Masan Group’s future growth initiatives and strengthen its balance sheet, improving earnings by $50 million a year, the company said. The group’s outstanding debts were 34.7 trillion dong ($1.5 billion) through the end of June, according to its first-half fiscal report.

In November, Masan repurchased 100.7 million shares at 58,352 dong apiece, increasing its treasury shares to 109.9 million. Masan does not plan to issue additional shares to investors during the next three years, the company said.

Masan Group shares rose 1.2 percent to 91,200 dong in Ho Chi Minh City trading on Wednesday. The shares have climbed 18.9 percent since the start of the year, compared with the 1.2 percent gain in Vietnam’s benchmark stock index.

KKR & Co. last year invested $250 million in Masan Group and its Masan Nutri-Science in a deal that valued the company’s meat-producing subsidiary at $2 billion.

To contact the reporter on this story: Mai Ngoc Chau in Ho Chi Minh City at cmai9@bloomberg.net

To contact the editors responsible for this story: John Boudreau at jboudreau3@bloomberg.net, Jeff Sutherland

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