Information-communication-technology (ICT) giant FPT Corporation (FPT) has sold 47% of its stake in distribution arm FPT Trading to US-based ICT product company Synnex.
The deal was announced on September 12, just one day after FPT released its resolution to reduce ownership in FPT Trading from 100% to below 50%.
According to the cooperation agreement that was signed between FPT and Synnex on September 12, the US company will possess 47% of FPT Trading, which is valued at more than US$80 million, or VND1.8 trillion.
FPT will receive VND932 billion from the deal, including the payment from Synnex and the remaining profit of FPT Trading.
The group also announced it would sell maximum five percent of charter capital in FPT Trading to employees who have made great efforts and contributions to the development of the distribution arm.
“Synnex is known as one of the top ICT production distributors in the world and has provided the most advanced and optimal distribution model for the market,” FPT Chairman Truong Gia Binh said in the group’s statement.
“We hope that FPT Trading will progress in the future based on a more efficient development strategy with the presence of Synnex in the company’s management board.”
Synnex General Director Evans Tu said the deal would offer Synnex the best way to enter Vietnam’s ICT and electronics market as FPT Trading has proven itself as a leading distributor for having developed an efficient, well-managed and well-structured distribution network in the past 20 years.
Synnex is a US-based world class ICT value-added distributor and supply chain services provider. The company ranks as the third largest ICT firm worldwide and made US$33 billion turnover in 2016.
Before the deal was completed, FPT Trading was a subsidiary of FPT and contributed only nine percent of the group’s total profit in 2016 – the lowest since 2006.
The decline of the company’s profit was attributed to the fall of Apple products sales in Vietnam after the US largest listed company by market capitalisation changed its distribution policy, allowing local retailers to directly import products from Apple to sell on the market.
FPT Trading performed the best in 2007, followed by 2008 and 2006.
It contributed 45% of FPT’s total profit in 2007, 33% in 2006 and 34% in 2008.
The figures declined to 21% in 2009 and kept decreasing to 19% in 2015.
In early August, FPT sold 30% of its ownership in FPT Digital Retail to two investment funds – Dragon Capital and VinaCapital -- reducing its stake in the retail unit to 55% from 85%.
FPT announced its plan on divestment of the two sub units at the group’s annual shareholder meeting in April 2017 to return to the form of a profitable, sustainable, pure ICT business.