Group 5

Trn Mai Anh

Nguyn Anh Dng
Trn Qunh Hoa
Nguyn L Diu Linh
Hong Mai Ngn
o Dip Tho
Nguyn Th Trm
Nguyn Qu Tun

I. THEORETICAL BASE

Definition
M&As : activities reserving the control right of a
whole or part of enterprises through owning them
Source: The complete guide to mergers
and acquisitions (Timothy J.Galpin )

Classification

Horizontal M&As: Kinh Do and Walls
Vertical M&As:
Forward: General Motor and Bridgestone Tyres
Backward: TH True Milk and Tate & Lyle Sugars
Conglomerate M&As :
Vincom and Vinpearl
A. US
D. Vietnam
B. Thailand
C. Malaysia D. Vietnam
X-mens country of origin is......:
II. OVERVIEW ABOUT HOME &
PERSONAL CARE INDUSTRY
1. General view
All significant deals occured in 2011
Acquisitions of 3 established Vietnamese
firms by gigantic foreign investors.


Acquirers Acquired companies
February 2011 Marico Ltd Company
(India)
International
Consumer Product
Corporation (ICP)
June 2011 Groupe SEB
(France)
Asia Vina Joint Stock
Company
August 2011 Unicharm
Corporation (Japan)
Diana Joint Stock
Company
2. Acquired firms
Market leaders in specific consumer
good segments (market share: over 25%)
Good performance before 2011 (annual
growth rates: over 20%)
3. Foreign acquirers:
International giants in the corresponding
sector
Long-standing history of at least 25 years
Intially or gradually penetrating into Asian
markets (through China, South Korea,
Thailand, Taiwan, Singapore...)
Contents
Introduction about Marico & ICP
1
Rationale
2
Evaluation
3
Conclusion
4
Case study: M&A
Marico & ICP
- Based in India
- Operating in 3 main segments:
shampoo, skin care and foods
- One of the leading companies in
Indian consumer goods market
(annual revenue: US $564.376
million)
- Based in Vietnam
- Operating in 4 main segments
shampoo, skin care, cleanser,
foods
- Most successful product: X-men
series market leader in the
segment of shampoo for men
Summary of the acquisition deal
- Marico bought 85% stake of ICP in 2011
- Estimated value: US $ 55-60 million.
- The acquisition was expected to contribute about 15% to
Maricos revenues from international business
Normal characteristics of
an acquired company





Like a Titanic
(marvellous-looking, but on the verge of
sinking down)

Large and reputed
Running into difficulties
III. RATIONALE FOR
THE ACQUISITION OF ICP
This was not the case for ICP:
+ Strong products on domestic market
+ High annual revenue growth rates:
approximately 30%
ICP still acquired by Marico?

Product
Position on
domestic
market
Estimated
market
share
X-men

Market leader 60%
LOvite Top 5 7%
From the perspective of ICP
1. Shortcomings in strategy of selecting
key partners
2011: 2 largest shareholders of ICP
sold out all of their share of capital to
Marico most important reason


Shareholders Year Share of
capital
Mekong Enterprise
Fund II
2006 21%
BankInvest 2008 21%
From the perspective of ICP
Reasons
Economic instability in Vietnam (2011)
Fierce competition in consumer good
market (especially for X-men)
Characteristics of PE funds
Short-term investment (3-5 years)
Pressure of fund-shareholders

From the perspective of ICP
2. Competition
pressure
Growing competition
in consumer good
sector
Unsuccessful
diversification
strategy

Cash cows
X-men
Still market leader, but growth rate has
slowed down since 2008
Fierce competition (Clear Men, Romano,
Oxy and Nivea)


Dogs
X-series
2007: ICP launched X-
series (a series of deluxe
work clothes for men)
2008: Financial crisis
-> lower demand for luxury
clothes
-> double rental costs
withdrawn in June 2008
Orangina orangeade
2009: ICP entered
franchising contract with
Orangina (Dutch-based
orangeade brand)
Q3/2009: Orangina was
acquired by Suntory
terminated the
franchising contract with
ICP
Question marks
LOvite
Position: Among top 5
cosmetic brands in
Vietnam (launched in
2006)
Limitations
Large, well-known
competitors
Humble capital
Thuan Phat
Position: Famous food
additive brand in
Vietnam (acquired by
ICP in 2009)
Limitations
Loss of human capital
No explicit
improvement since
2009
From the perspective of Marico
1. Maricos market expansion into Asia
- Marico penetrated into Asian market
since 2010, starting with Malaysia and
Singapore Vietnam was the next
target in 2011



Countries Acquired companies Proportion
Malaysia Code 10 Colgate -
Pamolive Company (hair
creams, hair gel)
100%
Singapore Derma Rx Asia Pacific
Pte Ltd (skincare
aesthetics)
100%
From the perspective of Marico
2. Potentials of ICP
- Remarkable success in consumer good
sector
- Successful products (X-men, LOvite)
- Stable annual growth rate (about
30%/year)
From the perspective of Marico
3. Similarities in business strategies
- Similar product mix (shampoo, cosmetics
and foods)
- Similar corporate culture
Clarified in the next part

EVALUATION
Opportunities
Prospects for
sustainable
cooperation
Revenue
enhancement
Prospects for sustainable
cooperation

Similarities in
business
strategies
Retainment of
ICPs
management
board
Insight into Vietnamese customers
preferences and culture
Leadership and experiences
Avoidance of demotivating hundreds
of current ICP employees
Operating in both domestic and
international markets
Numerous similarities
between product mix
Marico ICP
Shampoo
Parachute (45.8% market
share, market leader in
Indian shampoo market)
X-men (over 60% market
share, market leader in
Vietnamese male
shampoo category)
Skin care

Kaya (ranked 1
st
in Indian
cosmetic dermatology)
LOvite (ranked 5
th
in
Vietnamese premium
cosmetics category)
Foods
Saffola (52.1% market
share, market leader in
Indian edible oil segment)
Thuan Phat (famous brand
in Vietnamese food
additive segment)
Revenue enhancement


ICP revenue
and profit
(2011)
2010 2011
Net Revenue 380.0 550.3
Gross Profit 183.2 264.3
Revenue from financial activities 0.6 2.5
Expense for financial activities 0.4 0.8
Expenses for sale of goods 132.1 174.5
Management expense 33.8 38.0
Profit from operation activities 17.6 53.5
Before-tax profit 17.1 53.6
After-tax profit 12.3 47.7
Owner equity 236.9 284.4
Charter of capital 112.2 112.2
Total assets 275.8 340.5
Parachute
X men
LOvite Kaya
MARICO ICP
CROSS-SELLING
Challenges
Macro-
economic
instability
High
operation
costs
Fierce
competition
Unavailability
of materials
Shortcoming
in marketing
strategies
Macro-economic instability
Q1 Q2 Q3f Q4f 2012f 2011
GDP (% year) 4,1 4,7 5,4 5,8 5 5,9
CPI (% year) 17,2 11 5,8 6,5 9,2 18,6
Trade Deficit
(% GDP)
0,9 -1,1 1,7 3,7 2,3* -9,8*
Open market
Interest
(last quater, %)
13 10 8 8 8 14
Exchange rate
VND/USD
20.900 20.905 21.500 21.500 21.500 21.034



Consumption would inevitably plummet
Consumers less likely to choose unfamiliar products of new
companies like Marico
High operating costs
Massive cost of introducing Maricos products
into Vietnamese market
Costly advertising campaigns
Numerous market surveys
R&D projects to adjust the existing products
Fierce competition
Shampoo

Unilever P&G
Year entering
Vietnamese market
1995 1995



Products
Estimated market
share: 43.3%
- Clear (16.2%)
- Sunsilk (11.1%)
- Dove (7.0%)
- Clear Men (5.5%)
- Lifebuoy (3.5%)
Estimated market
share: 32.8%
- Pantene (13%)
- Rejoice (11.4%)
- Head & Shoulder
(8.4%)
Fierce competition
Domestic
competitors
Foreign competitors
Cosmetics LOreal Paris and
Lancome (France),
Shiseido (Japan)
Debon and Ohui
(South Korea)
P&G (US)
Unilever (UK)
Food Kinh Do
Masan Group
Unilever
Nestle
Dutch Lady
etc..




Cosmetics
& Food
Unavailability of materials
Key materials: seasonal commodity crops
(copra, kardi oil, safflower oil & sunflower oil)
Kardi (main ingredient of Saffola oil): only
prevail in India
import kardi input costs increase
price competition
Shortcomings in marketing
strategies

Realistic targets and appropriate strategies.

Deep understanding of the operating sectors/
opportunities/ threats of macro-environment.

Deep understanding of the culture, speciality area,
structure, management team of each organization.

Conclusion