Masan's strategy to protect its retail market share through M&A.

VnExpress•01/12/2023

Masan Group's acquisition of the VinCommerce, VinEco, and Phuc Long chains aims to contribute to completing the consumer ecosystem and reshaping the Vietnamese retail market.

At the Vietnam Mergers and Acquisitions Forum 2023 on November 28th, Masan Group's acquisition of the VinCommerce and VinEco chains topped the list of 10 outstanding Vietnamese corporate acquisitions of Vietnamese businesses between 2009 and 2023.

Representatives of Masan Group (center) receive the award at the event on November 28th. Photo: Masan Group

The first step into the beverage industry.

Masan's first step on its M&A journey was entering the beverage market by acquiring a controlling 50.3% stake in Vinacafe in 2011. This stake was later increased to 53.2% in 2012. The total investment value of this transaction was $58 million.

To further penetrate the beverage industry, in 2013, Masan acquired a 24.9% stake in Vinh Hao mineral water, subsequently purchasing additional shares to increase its ownership to 63.5%. From 2014-2015, the company successively invested in Cholimex Food, Quang Ninh Mineral Water, and Saigon Nutrition Food Company.

Deals with VinGroup and Phuc Long

In 2019, Masan Group merged with the VinCommerce retail system (now WinCommerce) from VinGroup and officially owned the VinMart and VinMart+ chains (now WinMart and WinMart+). By 2020, Masan Tungsten (a subsidiary of Masan High-Tech Materials) acquired the tungsten business platform of HC Starck Group GmbH.

In 2021, Masan spent $15 million (equivalent to VND 340 billion) to acquire a 20% stake, initially valuing it at $75 million. Just one year later, Phuc Long's valuation increased sixfold to nearly $450 million after Masan spent over VND 6,100 billion to acquire an additional 65% stake. Currently, the group owns 85% of the coffee chain. In 2022, the company continued its acquisition by purchasing another 15% stake from Nyobolt Limited.

Customers experience Phuc Long products. Photo: Masan Group

These transactions have made Masan Group Corporation a leading company in M&A strategy during the 2009-2023 period, as recognized at the Vietnam Mergers and Acquisitions Forum 2023 (M&A Vietnam Forum 2023).

Over the years, foreign retail corporations have been aggressively investing and now own a number of leading businesses in Vietnam. This trend shows no sign of stopping as many domestic businesses are facing difficulties and challenges.

Fresh produce counter at Winmart. Photo: Masan Group

A Masan representative stated that the most memorable milestone was the merger with the VinCommerce retail system. The management team only took one month to reach the decision. The representative affirmed that Masan's partnership with Vingroup was also driven by the desire to "keep the retail market under domestic management to preserve Vietnamese brands."

Operating WinCommerce, Masan not only possesses the capability to manufacture branded consumer goods but also further expands its already excellent distribution system. Masan also becomes the first and only consumer and retail group in Vietnam with a model similar to a few leading multi-channel consumer and retail corporations in the world such as Walmart.

WinCommerce retail chain undergoes a complete transformation.

Four years after the M&A deal, WinCommerce's number of outlets has increased from 3,020 in December 2019 to over 3,600 WinMart, WinMart+, and WIN supermarkets and stores, serving approximately 32 million customers monthly in 62 provinces and cities nationwide. As of November 30th, the WIN chain of stores reached 385 outlets across the country.

Thanks to numerous efforts in operational innovation, improving product and service quality, and implementing a "good price" strategy with a diverse range of products, WinCommerce, which initially recorded losses of over $100 million when it was first acquired by Masan, has now seen significant positive changes in its business performance.

Winmart attracts a large number of customers. Photo: Masan Group

According to the Q3 financial report, 70% of WinCommerce's mini-supermarket group recorded a net profit margin of 2.2%, marking the second consecutive quarter of positive net profit. WinCommerce achieved stable EBITDA (earnings before tax, interest, and depreciation) growth in Q3, reaching an EBITDA margin of 2.9%, up from 2.2% in Q2 and 1% in Q1. Driven by growth strategies, WinCommerce reached break-even EBIT in Q3 and is on track to achieve profitability in the near future, for the first time since the Covid-19 period.

Masan's leadership expects WinCommerce to reach the break-even point for after-tax profit across the entire network in 2024 thanks to effective growth strategies.

Thai Anh

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