SCG Packaging (SCGP) is joining hands with its Vietnamese partners under a 10-billion-baht investment to expand its packaging solution business in Vietnam, where demand for packaging products is growing.
The latest move is the signing of a share purchase agreement yesterday to acquire a 70% stake in Duy Tan Plastics Manufacturing Corporation, Vietnam's top producer of rigid plastic packaging products, according to its letter sent to the Stock Exchange of Thailand.
The purchase will be made through SCGP's wholly-owned subsidiary and further transaction details will be provided in the middle of this year.
SCGP chief executive Wichan Jitpukdee said SCGP has constantly increased investment in Vietnam, which has yielded a revenue growth of more than 10% annually.
"SCGP is prepared to work with all partners to share experience and knowledge in the development of integrated packaging solutions and support the growing demand for diverse types of packaging among customers in Asean," he said.
Duy Tan operates business-to-business sales to multinational companies and local brand owners of consumer and fast-moving consumer goods. The company also manufactures household plastic containers under the brand name "Duy Tan," with a capacity of 116,000 tonnes per year.
The 10 billion baht is part of 20-billion-baht investment budget SCGP announced last month for business expansion and merger and acquisition plans.
Earlier in 2009, SCGP established Vina Kraft Paper in Binh Duong, Vietnam, to produce packaging paper, with total production capacity of 500,000 tonnes per year.
In 2015 the company invested in Tin Thanh Packing Joint Stock Company (BATICO), one of the five largest flexible packaging producers in Vietnam.
The company also acquired 94.11% stake in Bien Hoa Packaging Joint Stock Company (SOVI), a producer of corrugated paper and offset laminated packaging in Vietnam, with an annual total capacity of 100,000 tonnes.
SOVI's annual earnings are more than 1,600 million dong (over 2.20 billion baht).
"All three projects expand SCGP's production base for downstream products in Vietnam and are expected to contribute sales of an additional 8.50 billion baht per year," Mr Wichan said.
SCGP is also seeking opportunities for business expansion in paper production capacity in northern Vietnam to serve demand within the country.