SCG is one of the largest building materials firms in Southeast Asia, and the planned divestment from Tien Phong seems to run counter to the firm’s longstanding aim of dominating the domestic market for plastic parts Vietnam.
In recent years, SCG became a strategic investor in both Tien Phong and Binh Minh, Vietnam’s two largest plastic parts manufactures, in addition to making other investments in some unlisted plastics firms.
Indeed, the move seems especially surprising in light of the Vietnamese government’s plans to sell its remaining stakes Binh Minh and Tien Phong, and remove previous caps on foreign ownership in both firms.” The state maintains a substantial ownership stake in both firms via the State Capital Investment Corporation (SCIC).
Nguyen Van Thuc, a Deputy General Manager of Tien Phong Plastics, said that Saraburi offered no explanation for the divestment. The SCG side, represented by Saraburi, also declined to comment.
Industry insiders suggest the conflict between the major shareholders in Tien Phong Plastics has existed for a long time. The evidence for this is that this month, the Tien Phong Plastics Company signed a comprehensive strategy cooperation with another Saraburi partner, Sekisui Chemical of Japan.
Saraburi can overcome this internal conflict through acquisition of SCIC shares to take control. However, SCIC still has not yet moved to divest from Tien Phong. The lack of clarity and slow process of SCIC divestment may have been a source of frustration of SCG .
In addition, Nguyen Nam Son, Managing Director of Vietnam Capital Partners Fund (VCP), said that Saraburi probably saw the goal of merging Tien Phong and Binh Minh Plastics as difficult to implement.
If Saraburi became the overwhelming shareholder of both of these companies, it would become the market leader with a market share of over 50%.