TOKYO -- The Sagawa group will acquire Phat Loc Express, Vietnam's fifth-largest delivery service, gaining a foothold to expand operations nationwide as online shopping continues to grow.
Japan's SG Holdings, the parent of Sagawa Express, will buy all of Phat Loc's shares from management. The Vietnamese company was established in 2001 and has about 1,200 employees. Its roughly 60 branches cover deliveries in the entire country. Phat Loc logged sales of over $9 million in 2015, and the purchase price likely will be a similar amount. With a market share of just a few percent, the company is dwarfed by Vietnam's two major delivery services.
SG Holdings began deliveries in Vietnam via a local subsidiary in 2012. The company handles its own deliveries in Ho Chi Minh City and Hanoi but contracts local businesses for other regions. The purchase of Phat Loc will let SG Holdings expand service nationwide.
Vietnam's service quality remains rather low, and packages sometimes arrive late or damaged. The Sagawa group will tap its Japanese know-how to try to boost the quality of Phat Loc's service in order to challenge Vietnam's delivery leaders.
SG Holdings teamed with major Vietnamese real estate and retail company Vingroup in November. The Japanese business will deliver products for the group's supermarkets and convenience stores. The delivery company is accelerating its Southeast Asian expansion, partnering this year with companies in Indonesia and the Philippines.