1.

M&A Definition
The difference between a merger and an acquisition relates to meaning, formation of new
firm, purpose and size of company.

BASIC MERGER ACQUISITION

Meaning A merger is the combining of two An acquisition is the process whereby

or more companies into a single a company or business entity
entity, with the newly created purchases or acquires another one but
company often taking on a new no new company is formed
name

Formation Yes No
of new firm <When two companies merge, <The one company totally got control
they might make a new company over the other company and only one
to work or dissolve any one company exists>
company>

Purpose To decline competition and To increase the instantaneous

enhance operational efficiency development

Size of The size of the merging The acquiring company is larger or

company companies is more or less the bigger than the acquired one
same

Over the years, Vietnam has continued to witness high-value mergers and acquisitions
transactions in a variety of sectors, such as food manufacturing, real estate, banking, and
retail. One of the most significant M&A transactions is Vincommerce and VinEco of
Vingroup merges with Masan to form Vietnam’s largest retailer.

2. Overview
a. Vingroup
About Vingroup:  
Vingroup  Joint  Stock  Company  (“Vingroup”  or  “the  Group”)  is  Vietnam’s  largest 
non-state-owned  enterprise(*)  and  is  the  largest  listed  companies  in  Vietnam  as 
measured by market capitalization.
With the initial focus on developing hotel and residential properties under the Vinpearl and
Vincom brands, Vingroup has constantly developed and expanded other business segments.
Today, Vingroup competes in six business segments:
 Industrials
 Technology
 Property 
 Hospitality - Entertainment
 Healthcare
 Education
b. Masan
Masan Group is another way of calling Masan Group Joint Stock Company. This is one of
the big business groups in Vietnam's private economy. The main business area that Masan
Group focuses on is Vietnam's consumer goods and resources. With the goal of becoming the
No. 1 business group in Vietnam, Masan has continuously developed over the years.
  Business field:
 Food segment: Nam Ngu, Chinsu, Tam Thai Tu, Omachi, Kokomi, Tien Vua, Ponnie,
Cowboy Pig
 Beverage segment: Wakeup, Vinacafe, Dodohaba, Bfast, Compact, Ruby, Vivant,
Vinh Hao, Su Tu Trang, Ho Van
 Household segment:
 Retail segment: Meatdeli, later with VinCommerce (December 3, 2019)
 Agriculture: Anco, Biozeem, Vissan, later with VinEco (December 3, 2019)
 Banking segment: Techcombank
 Telecommunications: Reddi . Mobile Network

3. Reasons Vingroup transferred VinCommerce and VinEco to Masan:

• Vingroup wants to focus resources on technology and industry

After 5 years of establishment and development, with more than 2,600 supermarkets and
stores Vinmart and Vinmart+ in 50 provinces and cities across the country, VinCommerce
and VinEco have initially completed the mission set out by Vingroup. The third-quarter
business results report of 2019 showed that Vingroup’s retail revenue reached more than
7800 billion VND, an increase of 66% over the same period last year. However, to gain
domination in this market, the game is as fierce and expensive as the "money-burning" field
e-commerce. In recent years, Vingroup’s financial statements have all recorded retail as one
of the highest loss segments.

Through the chart, it can be seen that Vingroup's retail revenue continuously grew for 5 years
from 2014 to 2019. However, because of the expansion process, the business still recorded a
net loss. It was estimated that in 5 years of implementation, Vingroup has lost nearly 17,500
billion VND for the retail segment. This loss would not affect too much for a corporation
with an asset scale of nearly 15 billion USD like Vingroup. But it would be better if Vingroup
could optimize all resources to develop its core areas, turning VinFast and VinSmart into
strong international enterprises.

 Don't let Vietnamese businesses lose on home field

For a time, the Vietnamese market was shaken by the successive shedding of foreign
enterprises such as Lotte of Korea, Aeon of Japan, Central Group of Thailand... With
nationalist policy, Vingroup is determined not to let foreign "sharks" dominate the domestic
retail market. Mr. Nguyen Viet Quang - Vice President and General Director of Vingroup
highlighted that: “From the very beginning, we were determined to choose only Vietnamese
businesses to keep the retail market for Vietnamese people, ensuring a level playing field for
domestic producers”. With such clear criteria, on December 3, 2019, Mr. Pham Nhat Vuong -
Chairman of Vingroup and Mr. Nguyen Dang Quang - Chairman of Masan Group closed the
most impressive M&A deal of the year. According to the agreement, VinCommerce, VinEco
of Vingroup and Masan Consumer Holding will merge to form Consumer Goods - Retail
Group. In which, Masan Group will take operational control of VinCommerce and VinEco
while Vingroup will be a shareholder.

 Masan is Vingroup's perfect piece in the retail segment

The limitation of VCM acquisition units to domestic corporations has made the selection of
partners capable of carrying out this billion-dollar deal quite difficult. At that time, besides
Masan, Saigon Co.op and Mobile World Investment Corporation (MWG) are the two
remaining few candidates capable of conducting this deal. However, Masan is the strongest
competitor when the indicators of profit, EBITDA, equity and total assets are all better than
the other units. (Bỏ)

In Vietnam, Masan is one of the few units can execute this deal. In addition, Masan is also a
major shareholder of TechcomBank, one of Vingroup’s strategic financial partners related to
projects that Vingroup is implementing. Because of lacking financial resources to
immediately execute an outright acquisition, Masan has used conversion method along with
options commitments. It is undeniable that Masan is the perfect piece of Vingroup in the
retail game. With this deal, Masan would own the largest retail system in the country. As a
giant in the food and beverage manufacturing industry with many famous products such as
Chin-Su, Nam Ngu, Tam Thai Tu, Omachi, VinaCafe, Wakeup 247, and a fast-moving
consumer goods platform as its core business, Masan could exploit and make the most of the
retail ecosystem that Vingroup has built.

4. Opportunities and challenges

4.1. Opportunities

 Vingroup will have the resources to focus on strategic businesses, while Masan will
have an important piece to build a retail empire.

Vingroup has a bigger goal than retail, and for Masan, VinMart is an important piece in the
consumer goods strategy.

As mentioned, VinCommerce, VinEco and Masan Consumer merged into a consumer-retail

group. Masan Group holds control of the operation, Vingroup is a shareholder.

The retail segment is a big piece in Vingroup's ecosystem, complementing other fields,
especially real estate. Except for the VinEco system, Vingroup is not too deeply involved in
the field of consumer goods production, even though instant noodles used to be the starting
point for the group. Meanwhile, Masan, with the fast-moving consumer goods platform as its
core business, will exploit and make better use of the retail ecosystem that Vingroup has
built.

Therefore, after ceding control to Masan, Vingroup will still be supported for the real estate
ecosystem and technology production - the core business of the group. And Masan will have
a large distribution system.

Since the announcement of the strategy to shift to technology - industry - services, this field
has become the focus of Vingroup's investment with the scale of division's assets increasing
rapidly. By the end of the fourth quarter of 2020, Vingroup's production division had a
revenue of VND 6,903 billion, up 40% over the same period last year. In 2020, Masan
Consumer recorded 23,343 billion VND in revenue and 4,597 billion VND in profit after tax,
up 26.3% and 13.2% respectively over the previous year.
  Owning a large system like Vinmart will help Masan optimize distribution channels,
reduce the ratio of intermediary costs to consumers.

Unlike Vingroup, except for minerals, Masan's remaining core activities revolve around
retail. And Vinmart can be an important piece for this group's ambition to become an empire
in the field of consumer goods - retail.

In the 2018 annual report, Masan's management emphasized that the next strategy is to
connect business areas with ecosystems to meet the daily needs of consumers. The direction
of this strategy is to launch a "a one-stop shop" store - where all customer problems are
solved, from finance, meat, food and beverage to healthcare. In addition, direct-to-consumer
distribution will not incur intermediary fees through supermarkets. With Vinmart's large-
scale system, this deal can help Masan's ambitions accelerate.

Besides, owning a Vinmart system can help Masan compete in the future with "giants" like
Amazon or Alibaba.

4.2. Challenges

 Challenges on development strategy

Besides the opportunities received when merging with Masan, the Vinmart system also faces
certain challenges. When there is a change in the owner, it is certain that business strategies
will have certain changes. This means that Vinmart will have to go through a period of
transformation when Masan takes over the management and operation of the Vinmart system.
And this transformation will certainly make Vinmart’s activities slow down for a certain
period of time.

Furthermore, Masan is a business that specializes in production rather than distribution.

Therefore, without the right strategy, the results of the Vinmart system will hardly have a
new breakthrough.

Bổ sung:

 Impact on investor sentiment

Although Masan will benefit from mastering the distribution system and minimizing
intermediary costs, in order to maintain the game in this market, profit erosion is inevitable. If
following the way of Vingroup, it is likely that the story of trading profits for market share
will continue. Given the long-term philosophy of Masan’s management, this issue may not
have much impact. But for investors in the market, the profit figure of Mansan Consumer
Holdings in the coming years will be a matter of concern. Closing the session on December 3,
2019, after Vingroup announced the deal, MSN shares on the stock exchange fell, losing
nearly 7% of the market price, and Masan’s capitalization “evaporated” more than 5600
billion dong.
  Labor burden

The acquisition of a system of 2600 supermarkets and stores immediately increased Masan’s
labor size to over 20,000 people. That means the number of employees of Masan almost
tripled after this merger and that is the real challenge.

5. The development process of VinMart when it belongs to Masan

The development of the supermarket system and VinMart & VinMart Plus stores after
returning to the new owner's hands always makes many people curious. Because the
exchange of owners of this supermarket chain has caused a lot of talk.

Masan Group announced the preliminary business situation of its member company
VinCommerce in the first quarter of 2020. Specifically, in the first quarter of its operation
under the leadership of Masan Group, VinCommerce Company (the parent company of
VinMart and VinMart+) recorded VND 8,709 billion in revenue, up more than 40% over the
same period in 2019.

In addition, revenue increased thanks to the opening of 27 more supermarkets and 1,192
stores in 2019. The retail supermarket chain grew 27% in the first quarter. Masan Group has
built development strategies chain stores and supermarkets of VinMart & VinMart+ in a new
direction. Limit the opening of more supermarkets and stores as before.

Despite reducing the opening of more chain stores and supermarkets, as well as the closure of
some supermarkets due to the impact of the epidemic. However, retail sales of supermarket
chains and stores still increased by 90% over the same period.

Masan Group's forecast for the development of VinCommerce was reach a revenue of more
than 42,000 billion VND in 2020, an increase of 64% compared to 2019. In the growth will
mainly come from the company's chain of stores and supermarkets. This accounts for 25%. In
2020, they continued to open new 20-30 supermarkets and 300 to 500 stores. At the same
time, Masan closed about 10 supermarkets, 150 -300 stores with inefficient operations.

MASAN LỖ HƠN 5.600 TỶ ĐỒNG SAU 2 NĂM GIA NHẬP CUỘC CHƠI BÁN LẺ

Tập đoàn Masan vừa công bố báo cáo tài chính kiểm toán năm 2021. Trong các mảng kinh
doanh của Masan, "sản phẩm tiêu dùng có thương hiệu" tiếp tục là trụ cột khi đem về khoảng
5.000 tỷ đồng lợi nhuận.

Tuy nhiên, tính trên doanh thu, mảng bán lẻ tiêu dùng mới là số một khi tiếp tục đem về hơn
30.000 tỷ đồng cho Masan.

Thế nhưng, báo cáo của Masan cho biết, mảng bán lẻ tiêu dùng năm qua vẫn lỗ 1.446 tỷ
đồng, sau khi năm 2020 lỗ 4.186 tỷ đồng.

Như vậy, trong 2 năm sau khi nhận chuyển nhượng Vinmart và Vinmart+ từ Vingroup,
Masan đã lỗ tổng cộng hơn 5.600 tỷ đồng từ bán lẻ.