Case study : BIDV closes the biggest M&A deal in the banking industry

with the KEB Hana Bank.

a) Is it a Merger or Acquisition?
M&A BIDV - KEB Hana Bank On 11/11/2019, Vietnam's financial and
banking market witnessed the largest merger and acquisition (M&A). This deal
includes both acquisitions and mergers. Moreover , this is also a double
transaction. Accordingly, Korean bank KEB Hana Bank completed a strategic
investment deal to own 15% of BIDV's shares with a holding period of at least 5
years. At the same time, BIDV receives a long-term technical assistance from
Hana Financial Group and KEB Hana Bank, including but not limited to 6
areas: strategic corporate governance; technology and digital banking; retail
banking development; diversified asset portfolios; risk management; human
resources training and development..Specifically, BIDV has privately issued
more than 603.3 million shares to KEB Hana Bank with a total transaction value
of nearly VND 20,300 billion. After issuing shares to KEB Hana Bank, BIDV's
charter capital increased from VND 34,187 billion to VND 40,220 billion, the
highest in the Vietnamese banking system.

b) Is it a friendly or hostile bid?

Sharing at the signing ceremony on November 11, Mr. Ji Sung Kyu, General
Director of KEB Hana Bank said that this is the first time a Korean bank has
bought shares of a Vietnamese bank. "So far, Korean banks have often invested
in the Vietnamese market by opening branches, banks with 100% capital and
representative offices. More than two years ago, we had a lot of worries when
using the investment figure of 1 trillion won. But the cooperation has been
gradually completed" - he said.
So it can be said that it is friendly bid because the directors of KEB Hana Bank
agree to a takeover.

c) Is it a buyout? How do you know?

At the end of October, the State Bank approved for KEB Hana Bank to buy
15% of BIDV's privately issued shares, marking the Korean bank's pouring
1,000 billion won (more than 20,000 billion VND) into BIDV.
So it's not a buyout because a buyout refers to an investment transaction where
one party acquires control of a company, either through an outright purchase or
by obtaining a controlling equity interest (at least 51% of the company’s voting
shares), while KEB Hana Bank only buy 15% of shares.
 d) Is it a fair deal? Explain.
Yes, it is. Because this mergers bring advantages for both BIDV and KEB
Hana. This is one of the most biggest M&A case in Vietnam that make Hana
Financial Group become a powerful in Asian economy. After the deal, KEB
Hana own 15% authorized capital equal to 603 million shares of BIDV.
Immediately, BIDV can solve the urgent capital increase and have more
competitive edge. In addition, it help develop financial ability and technology
support for BIDV in many aspect that promote BIDV’s growth more stable. The
invesment of Hana bank is a evidence of confident in Vietnam economy and
bank. About KEB Hana, they receive 483 billions dividend after the deal with
BIDV.

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