At the end of 2017, the M&A deal between ThaiBev and Sabeco was successfully executed, becoming one of the largest mergers and acquisitions in Vietnam and Southeast Asia. The transaction left a number of significant legal insights regarding M&A and foreign ownership of Vietnamese companies. In this article, DNP Viet Nam Law Firm provides an overview of the deal from a legal standpoint.
1. Terminology Explained
1.1 What is M&A?
M&A (Mergers and Acquisitions) refers to the process by which companies merge or acquire one another in order to expand operations, increase competitiveness, or optimize performance.
1.2. Foreign Ownership Limit (“Foreign Room”)
The term “foreign room” or “foreign investor room” refers to the maximum percentage of charter capital that foreign investors are permitted to own in a Vietnamese enterprise. Under Clause 3, Article 22 of the 2014 Law on Investment (in effect at the time of the transaction), foreign investors are restricted in terms of ownership in economic organizations, except in the following cases:
- In listed companies, public companies, securities trading organizations, and securities investment funds: foreign ownership is subject to securities laws.
- In equitized state-owned enterprises or those undergoing ownership conversion: subject to regulations on equitization and state enterprise transformation.
- In other cases: subject to relevant laws and international treaties to which Vietnam is a party.
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2. Forms of M&A
| Form | Merger | Acquisition |
| Content | Two or more companies combine to form a new entity; the original companies cease to exist. | One or more companies are acquired by an existing company; the acquired companies cease to exist. |
| Legal Consequences | The newly established company inherits all assets, rights, obligations, and legitimate interests. | The acquiring company inherits all assets, rights, obligations, and legitimate interests. |
| Legal Basis | Clause 1, Article 200, Law on Enterprises 2020 | Clause 1, Article 201, Law on Enterprises 2020 |
| Example | Company A and Company B merge to form Company C | Company B is acquired by Company A; Company A continues operations |
3. Background and Legal Analysis of the Transaction
3.1. Background
In 2017, Vietnam accelerated the equitization of state-owned enterprises to attract foreign investment and improve corporate governance. Accordingly, the Government issued Decree No. 59/2011/ND-CP and Decree No. 189/2013/ND-CP to support this initiative.
Saigon Beer–Alcohol–Beverage Corporation (Sabeco): Sabeco held over 40% of Vietnam’s beer market share, with a vast distribution network (32,000 retail points), well-known brands such as Saigon Beer and 333, and valuable land assets in key areas of Ho Chi Minh City.
Thai Beverage Public Company Limited (ThaiBev): As Southeast Asia’s leading beverage corporation and Thailand’s largest, ThaiBev sought to expand its footprint in the region. Consequently, acquiring Sabeco allowed ThaiBev to enter the third-largest beer market in ASEAN and utilize Sabeco’s distribution system and land assets for business development.
3.2. Key Elements of the Deal
On December 18, 2017, at the Ho Chi Minh City Stock Exchange (HoSE), Vietnam Beverage Co., Ltd. (indirectly owned by ThaiBev) acquired 343.6 million shares of Sabeco, equivalent to 53.59% of its charter capital, at VND 320,000 per share. As a result, the total value of the transaction reached USD 4.8 billion.
Due to the foreign ownership limit of 49% under the 2006 Law on Securities and the 2014 Law on Investment, ThaiBev was unable to directly acquire Sabeco shares. Instead, ThaiBev implemented a multi-tiered legal structure through subsidiaries:
3.3. Ownership Structure:
- ThaiBev → International Beverage Holdings (HK) → BeerCo (HK): ThaiBev owns 100% of these offshore companies. These entities, established under foreign laws, qualify as foreign investors (Clause 14, Article 3, Law on Investment 2014).
- BeerCo (HK) → Vietnam F&B Alliance Investment: BeerCo contributed 49% to the establishment of this onshore company, which is deemed a foreign-invested enterprise (Clause 17, Law on Investment 2014).
- Vietnam F&B Alliance Investment → Vietnam Beverage: This company owns 100% of Vietnam Beverage, which is incorporated in Vietnam and recognized as a Vietnamese enterprise.
- Vietnam Beverage → Sabeco: Vietnam Beverage directly acquired ~54% of Sabeco’s shares during the auction on December 18, 2017, becoming Sabeco’s largest shareholder and gaining controlling interest.
Through this corporate chain, ThaiBev indirectly acquired control of Sabeco while remaining compliant with Vietnamese foreign ownership restrictions.
4. Legal Significance and Implications
4.1. For Vietnam’s M&A Legal Framework
- The transaction reaffirmed the appeal of Vietnamese enterprises to foreign investors and set a precedent for large-scale M&A deals during equitization.
- It highlighted regulatory limitations on foreign ownership, prompting potential reforms to simultaneously attract investment and ensure a stable domestic business environment.
- For ThaiBev, the acquisition reinforced its regional presence and provided a strategic platform for its future operations.
- The ThaiBev–Sabeco transaction stands as a historic milestone in economic integration and market liberalization in Vietnam.
4.2. For Foreign Investors
- The deal serves as a case study for foreign investors seeking to operate within Vietnam’s regulatory constraints.
- It demonstrates the viability of creative investment structures to access the Vietnamese market.
- The transaction enhanced Vietnam’s status as an emerging market and encouraged further legal development in the M&A domain.
- It contributed to the evolution of Vietnam’s legal framework by balancing foreign capital attraction with strategic oversight.
Conclusion:
The ThaiBev–Sabeco transaction not only opened up opportunities for foreign investors to penetrate the Vietnamese market through innovative investment models but also drove significant progress in the legal framework governing M&A. This balance between attracting foreign capital and strategic control establishes a foundation for a transparent and sustainable investment environment, offering long-term benefits to international investors.
The information above is for reference only. If you require further details, please contact us using the information below.
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