Vingroup JSC’s retail and agriculture units will merge with Masan Consumer Holdings a subsidiary of Masan Group Corp. to create the new corporation, according to a Vingroup statement. Vingroup’s shares in VinCommerce and VinEco will be converted into shares of the new company, in which Vingroup will be a shareholder and Masan Group will take control.

Shares of Masan Group fell by the daily limit of 7% to its lowest close since November 2017 while Vingroup shares remained unchanged.

Vingroup, which started its auto assembly firm VinFast this year, agreed to the merger so it can focus more on manufacturing and technology, according to the statement. VinCommerce operates more than 2,600 VinMart supermarkets and VinMart+ stores, while VinEco oversees 14 farms.

“The deal will maximize the core competencies of each party to develop a new enterprise,” the statement said, adding the move will lead to “the development of Vietnam’s consumer-retail industry toward regional scale.”

The agreement will allow Masan “to quickly achieve our goal of becoming the leading domestic retail and consumer group,” Truong Cong Thang, chairman of Masan Consumer, said in a separate statement.

Masan Group will be able to take advantage of Vingroup’s national network as a distribution channel for its fresh meat subsidiary, Masan MEATLife, said Tran Nhat Trung, an analyst at ACB Securities. The merger will help Masan accelerate growth in its meat division because the company won’t have to develop its own distribution network from the ground up, he added.

The agreement will be finalized after legal procedures are worked through, according to the Vingroup statement.

By Nguyen Kieu Giang & Mai Ngoc Chau - Bloomberg - December 3, 2019