Upon completion of the merger of NKD and KIDO into KDC, Kinh Do Corporation (KDC) continue to plan to mobilize capital from abroad and list in foreign securities exchanges.

Vietnam Economic Times had a discussion with Mr. Tran Kim Thanh, Chairman of the Board of Directors of Kinh Do Corporation about the above mentioned issues.

Before the merger, KDC held only 28.3% of KIDO and 0% of NKD. After the merger, KDC owned 100% of both companies. How do you evaluate effectiveness of the merger for three companies?

In 2010, Kinh Do implemented a rapid development strategy through mergers and acquisitions (M&A). We consolidated all of major operation processes, the organizational structure, policies and regulations and internal control system. Individually, all three companies reached a impressive growth in terms of both revenue and profit. Generally, the Group obtained the consolidated revenue of VND 3,317 billion and profit before tax (including Food, financial investments & real estate) of VND 801 billion.

Externally, Kinh Do after the merger has had a more powerful voice with suppliers when negotiating the price, quantity, with distributors, supermarkets ... when negotiating for display spaces or payment terms, and with banks for financial support and other services. Internally,  member subsidiaries receives a lot of support from the Group in many aspects such as capital, technology, personnel, management…to improve the growth and business efficiency.

After NKD and KI DO, which companies will continue to be merged into KDC in the future, sir?

2011 is considered as a milestone for transition from Kinh Do Company to a Kinh Do  Food Corporation. In this year, we will continue to improve the corporate model in order to leverage the synergy between member companies, accelerating the M&A process, ensuring the rapid and sustainable growth and making an outstanding difference. We expects to merge Vinabico (KDC owns 51% of the company) and Binh Duong Kinh Do  Corporation (Kinh Do owns 80% of the Corporation) into KDC to help Kinh Do  own 100% of their capital, then, merge Kinh Do Sai Gon Bakery Joint Stock Corporation and some other food companies.

Stock market slowdown creates an opportunity for Kinh Do to get new members and rapidly expand at reasonable price. However, for M&A, Acquisitions is not difficult, just includes due diligence, price identification, formula for share conversion, but mergers is completely different. In Vietnam, there are practical M&A stories that acquisitions is implemented…then suspended because two parties cannot find a common voice. From the experience of the acquisition of Wall's ice cream and later the NKD and KIDO, Kinh Do realizes that, want to merge other companies, Kinh Do itself must firstly be "standard".

How to consider as "Standard", sir?

In 2010, Kinh Do  built a solid foundation for the Group’s needed future high growth and sustainable development. We standardized work processes through the implementation of SAP ERP helping managerial levels to have fast and accurately information to make decisions. We also institutionalized organization and operation according to the model of the stretegic business units (SBU) - identifying product categories bring the highest revenue and profit to the Group, focusing on management and investment. In general, applying the standard process helps the roll-out of business through M&A easier and faster.

However, most importantly, Kinh Do has attracted a number of personnel from multinational corporations to cooperate, hold high & midium level positions in the company, and coordinate with senior members of the company to create new breakthroughs in the coming years.

Foreign investors are now very careful in investing on Vietnamese stocks. Why do foreign partners select Kinh Do  for investment in this time, sir?

Recently, KDC shareholders have approved a KDC statement on issuing 20 million individual shares and on authorizing the Board of Directors to decide selection of a strategic partner. We will issue 20 million individual shares equivalent to VND 200 billion par value for foreign partners to increase its chartered capital by approximately 1,400 billion dong. Foreign investors will use these shares to issue Global Depositary Receipts (GDRs) for listing in a foreign stock exchange. We expect everything to be completed in the third quarter of this year.

 This mobilized capital will be used for investment in confectionery lines, workshops in plant at Binh Duong VSIP Industrial Park, expansion of the performance capacity of the ice cream and dairy product plant in Northwest Cu Chi Industrial Park, investment in new product research and development, expansion of distribution channels, development key brands, contribute to working capital, etc.

 Today, Kinh Do  is a leader of the confectionery manufacturing industry and in the near future, will be the largest food group in Vietnam before reaching the regional level. We do not want to be a good company only, we are endeavoring to build a Best Company with the ability of making difference that is not easy to imitate.

Thank you very much!