Carlsberg balks at Vietnam Beer price as stake sale heats up

[HANOI] Carlsberg A/S, the Danish brewer that wants to buy a majority stake in Hanoi Beer Alcohol Beverage Corp, said a surge in the Vietnamese company's share price has been fueled by speculative buying, setting the stage for heated negotiations in South-east Asia's fastest-growing beer market.

A near tripling of Habeco's price since its Oct 28 listing on Vietnam's regulated over-the-counter exchange doesn't accurately reflect the underlying value of the business as it's "mainly due to speculative buying on very thin volume," Tayfun Uner, chief executive officer of Carlsberg Vietnam, said in an interview in Hanoi.

Habeco shares closed as high as 144,700 dong this month after initially being listed at 39,000 dong, a price Uner described as fair. The government announced in August it wants to sell its 82 per cent stake for US$404 million, or about 48,000 dong a share, which according to Uner is a reasonable valuation.

Vietnam is in the midst of restructuring state ownership of Habeco in the north and top brewer Saigon Beer Alcohol Beverage Corp, known as Sabeco, in the country's south. The potential divestment is drawing interest from the world's largest brewers including Heineken NV, Anheuser-Busch InBev NV and Asahi Group Holdings Ltd, who are keen on Vietnam's young population and rising middle class in one of the world's fastest-growing economies.

"We want to support the Vietnamese government to make a success out of this, which means obviously to get a fair price and to ensure their success of the privatisation," said Mr Uner. Habeco's selling price should also reflect that its market position has dropped to third from second since the brewer purchased stakes in 2008, he said.

Carlsberg has been in talks with the Ministry of Industry and Trade to purchase a 61.79 per cent holding and plans to also bid for another 20 per cent stake that the government will sell at an auction, Mr Uner said. It currently owns 17.51 per cent.

The remaining 0.7 per cent - currently traded on the country's Unlisted Public Company Market exchange - is owned by other minority shareholders. Those shares dropped 0.8 per cent to 104,200 on Friday, reversing from a gain of as much as 3.6 per cent in earlier trading. Carlsberg shares fell 0.4 per cent by the close of Copenhagen trading Thursday.

"It is very possible the government will take the market price as reference for the stake sale," said Marc Djandji, head of institutional sales at Rong Viet Securities Corp. "Considering the small amount of shares available, if the government relies on the market price, it's just an artificial price. So the concern of Carlsberg is understandable."

Carlsberg, which has been waiting since last year for government permission to boost its stake in Habeco, has a first right of refusal for the sale, Uner said. The Danish brewer plans to compete with other bidders for the 20 per cent stake being sold at auction, and expects the government to sell it the larger holding at the winning auction price, he said.

Beer Guzzlers If the government fails to sell the entire 20 per cent stake during the auction process, Carlsberg would be willing to buy the 61.79 per cent holding at a price per share equivalent to its 2008 initial stake purchase, Uner said.

"Carlsberg, with the expectation that the Vietnamese government will respect our first right of refusal, would want to keep and grow the Hanoi brand," Uner said. "That does require, on top of the acquisition investment, a significant investment to keep and grow the brand." Vietnamese guzzlers are expected to consume more than 4.04 billion litres of beer this year, the most in South-east Asia and up from 3.88 billion litres in 2015, according to Euromonitor International.

Both Habeco and Sabeco are planning to list shares on Ho Chi Minh City Stock Exchange before Dec 12, according to Phan Chi Dung, head of the light industry division at the industry and trade ministry which oversees Habeco.

BLOOMBERG