(Saigon Times Online) – The Board of Directors of Kinh Do Corporation has approved a proposal to fund more investment in the Vietnam Vegetable Oils Industry Corporation (Vocarimex) to raise ownership from 24% to over 51%. 

This action has shown Kinh Do tends to phase out its confectionery business by selling 80% of shares in confectionery for Mondelez International, while making an investment in new industry - cooking oil. 

To become a dominant stakeholder in Vocarimex, Kinh Do plans to buy more Vocarimex’s shares in the market.

If taking control of Vocarimex, Kinh Do will make great impacts on the domestic market for edible oil since Vocarimex is a key player in vegetable oil, currently owning 51% stake in Tuong An Vegetable Oil, 24% stake in Cai Lan Oils (Neptune, Simply), 49% stake in Golden Hope Nha Be and 27% stake in Tan Binh Vegetable Oil

Thus, if becoming the dominant shareholder with 51% of shares in Vocarimex, Kinh Do will stand firm as the leader in the domestic cooking oil industry although its core business is confectionery. 

Being the largest enterprise in the domestic confectionery industry, Kinh Do is now standing at a crucial turning point when it decided to quit its core business and jump to FMCG such as food and beverage. Specifically, Kinh Do will boost investments in three other items: noodles (in comprehensive partnership with Saigon Vewong), cooking oil (with the purchase of 24% stake in Vocarimex, towards raising investment up to 51%) and coffee (investment in PhinDeli). 

Kinh Do's leadership has conceived that: the confectionery industry in recent years has experienced a sluggish growth and Kinh Do has been long looking for investment opportunities in the FMCG industry and necessities, including cooking oil, .noodles, coffee. The Vietnamese cooking oil market especially has the scale of over VND 22,300 billion, with a growth rate of 7 to 9%, considered as a sector with great prospects. 

The additional investment in Vocarimex and the sale of 80% stake to Mondelez will be submitted to the company’s extraordinary shareholders' meeting early next month.

Regarding Mondelez International’s deal to buy out 80% stake in Kinh Do confectionery business for VND 7,846 billion (about $370 million), Saigon Times Online also announced this information in the morning headlines:

Under the plan, Kinh Do will transfer 80% stake in Kinh Do Binh Duong (BKD) – currently operating Kinh Do confectionary business to Mondelez International. Mondelez can hold the option to buy BKD’s remaining shares at the same price of the first transfer. Mondelez may exercise the option to buy the rest one soonest within 12 months from the date of completion of the first transfer.

The remain of 20% of shares of BKD are worth at VND 1,961.7 billion in case Mondelez exercises the option to buy out. Totally Kinh Do can collect VND 9,808.6 billion for BKD’s 100% of shares if Mondelez exercises the option to buy out. This price is exclusive of cash, receivable accounts and credit obligation.

Vocarimex made IPO in late July 2014 by auctioning 37.9 million shares, equivalent to 31% of its charter capital. Besides, Vocarimex also sold 32% stake to two strategic investors namely Kinh Do (24%) and VPBS (8%).

According Saigon Times