Kinh Bac City Development Holding Company (KBC) plans to make an offer on the HCM City Stock Exchange to buy the remaining 80 percent of shares it doesn't yet own in SaigonTel (SGT).
KBC and SaigonTel are two key members of the Sai Gon Invest Group, a multifaceted group with 41 member companies operating in multiple sectors.
"The takeover of SaigonTel will help us better provide telecommunications infrastructure in our industrial zones, making us more attractive to investors, especially high-tech investors," said KBC Chairman Dang Thanh Tam.
"With the acquisition, we will also have a chance to expand our industrial network, since SaigonTel has a huge land fund," Tam said.
The takeover would create a new, enlarged entity with enhanced strength in real estate development and in telecommunications services provision in urban centres, hotels and industrial zones, as well as improved operational efficiency for both companies, he added.
The deal was first proposed in 2008 when KBC asked for its shareholders' opinion on acquiring SaigonTel through a public offering and turning it into a KBC subsidiary. Late last month, shareholders of both companies approved the merger plan, and KBC sought approval from the State Securities Commission.
Tam said he expected the transaction to be completed in the third quarter.
KBC, which is listed on the HCM City Stock Exchange, has charter capital of nearly VND3.3 trillion (US$174.6 million) and total assets of over VND9 trillion ($476.2 million). The company earned a net profit of VND261 billion ($13.8 million) in the first quarter of this year and targets a profit for the entire year of VND1.2 trillion ($63.5 million) on which it would pay a 40-per-cent dividend.
The company also has plans to issue 20 million new shares worth VND200 billion ($10.6 million) to a group of fewer than 100 investors.
By the end of last year, SaigonTel had charter capital of over VND670 billion ($35.5 million) and assets of VND2 trillion ($105.8 million). It has targeted a profit this year of VND480 billion ($25.4 million).