Listed firms fear hostile takeovers
Checking medicine before packing in Ha Tay Pharmaceutical Company. The efforts last year of Vien Dong Pharmaceutical to take over Ha Tay raised many eyebrows. — VNA/VNS Photo Duong Ngoc
HA NOI — Nearly 60 per cent of companies listed on the Ha Noi Stock Exchange say that the risks of becoming acquisition targets after going public put pressure on their business operations, according to a new survey conducted by the exchange in conjunction with the magazine Securities Investment.
The Ha Noi market has a number of companies with capitalisation of under VND300 billion (US$15.4 million) each, leaving them vulnerable to institutional or large individual investors, and efforts by some companies to acquire controlling stakes in others by buying up listed shares are not a new phenomenon.
Last year, Hung Vuong Co (HVG) made a bid to buy a 26-per-cent stake in An Giang Fisheries (AGF) while Phu Nhuan Jewelry (PNJ) made a similar play for Sai Gon Fuel Co (SFC).
But the most scandalous acquisation attempt last year was the effort of Vien Dong Pharmaceutical Co (DVD) to take over Ha Tay Pharmaceutical (DHT). DVD chairman Le Van Dung spent his own money to buy up over 60 per cent of DHT shares on the stock exchange and then sold the shares to DVD. Dung is now under investigation for violations of securities regulations.
The survey also found that most listed companies did not feel pressured by stock price volatility. Nearly 87 per cent of companies surveyed said that share price fluctuations did not affect their business operations, while only 5.9 per cent said share price volatility had a negative effect.
Disclosure
The survey also found that 92 per cent of listed companies, while finding disclosure requirement burdensome initially, now realised the benefits of disclosures in encouraging more modern and transparent management practices and financial reporting, helping them cut costs and increase business efficiency.
Ha Noi Stock Exchange general director Tran Van Dung said the exchange had applied software which would support companies in disclosing information on the exchange’s website.
Dung said firms would be trained and given accounts to use this tool, with pilot training for 50 selected companies to be conducted next month.
“These companies will announce their fourth-quarter 2010 results in April using this method,” he said, adding that all listed companies could be able to use the software to disclose information by the end of the year.
Both the State Securities Commission (SSC) and the HCM City Stock Exchange (HOSE) also have plans to upgrade their disclosure processes. The SSC is developing an information diclosure system (IDS) in colloaboration with the Luxembourg Agency for Development Cooperation, while HOSE is conducting tests for its own software system.
Over 1,200 public companies, half of which are listed, are subject to disclosure requirements. — VNS