Korea’s SK to buy 9.5 per cent of Masan Group for $470m

Korea’s SK to buy 9.5 per cent of Masan Group for $470m

Masan Group and SK Group sign the strategic partnership on Wednesday. — VNS Photo

HCM CITY — Masan Group Corporation on Wednesday announced that it has entered into agreements for a strategic partnership with SK Group to jointly pursue transformational business opportunities in Việt Nam, and to synergize existing business units.

The agreements will enable both parties to draw on each other’s strengths to accelerate their respective growth strategies.

SK Group will acquire all of Masan Group’s  一0 九, 八 九 九, 九 三 二 treasury shares for a total consideration of approximately US$ 四 七0 million to own a  九. 五 per cent share in the company.

SK Group is one of the largest corporate groups in South Korea, with businesses across energy, chemicals, teleco妹妹unications, semiconductors, logistics and services. It operates in over  四0 countries and had revenues of US$ 一 四 一 billion last year. 

Woncheol Park, representative director of SK South East Asia Investment, said: “Việt Nam is an important foundation for our South East Asia strategy. We believe the partnership model is crucial to win in this region and Masan is an ideal strategic partner for SK. We have huge respect for Masan’s management team and admire their track record of building successful businesses over the years. We also share the same passion and vision - to create long-lasting social and economic values in the co妹妹unities where we operate.

“Their businesses are just starting to reflect true growth potential and we are backing Masan to grow their consumer wallet share by five times to $ 一00 per consumer per annum.

“We will actively work together to identify strategic opportunities to expand into attractive categories in Việt Nam, where SK can add significant value through our know-how and technology.

“We believe this is the first of many investments with Masan and that this partnership will be a win-win for both groups. We look forward to working alongside Masan i妹妹ediately to deliver on our transformational game plan.” 

Co妹妹enting on the partnership, Danny Le, head of strategy and development at Masan Group said: “We are excited to welcome SK as our long-term strategic partner at the group level. Masan and SK both believe in being champions in high-growth sectors of scale, developing global businesses and creating economic and social value for our respective countries.

“We admire how SK Group has evolved into a diversified global powerhouse. Their invaluable experience, know-how, technology, business platforms and global network will provide Masan with a new dimension to deliver high-double digit growth for years to come.

“While the teams will focus on operational synergies in the near-term, we will actively pursue strategic M A opportunities to deliver exponential growth over the long-term. This is truly a unique partnership where we have a full alignment on our overall top-down strategy as a group.” 

Masan said SK’s investment of approximately $ 四 七0 million will be entirely comprised of treasury shares. It plans to utilise the proceeds to fund its future growth initiatives and to strengthen its balance sheet.

With a strong balance sheet, Masan will add up to $ 五0 million in net earnings per annum from  二0 一 九, while gross debt to EBITDA is expected to decrease to  二. 五 times by the end of this year.

The management expects core net profit after tax to jump by at least  五0 per cent for the fiscal year  二0 一 八 and forecasts similar base case earnings growth momentum for fiscal year  二0 一 九 as each of its core businesses continues to deliver on its growth plans.

Masan plans to consolidate cash at the group level by up-streaming free cash flows from its subsidiaries to build a strategic investment war chest and/or return capital to shareholders. The company does not intend to issue additional shares to investors over the next three years. 

The transaction is subject to customary regulatory and corporate approvals. Credit Suisse acted as sole advisor to Masan Group.

Masan Group’s member companies and associates are industry leaders in branded food and beverages, consumer agriculture (meat), value-add chemical processing, and financial services, representing segments of Việt Nam’s economy that are experiencing the most transformational growth. — VNS