The food conglomerate chose Vincommerce as an acquisition target because it had the largest retail platform by number of points of sale and accounted for 25 percent of the modern retail market, Nguyen Dang Quang, Masan Chairman, told shareholders in a report Thursday.

Vincommerce’s network of 2,600 VinMart supermarkets and VinMart+ convenience stores nationwide is also well placed to bring added value to MEAT Deli, Masan’s clean meat brand, he said.

"Although not everyone agreed with the merger deal, with many saying that retail is a completely different playing field, for us it all starts with putting consumers first, and this is our strength." 

Quang said new shopping experiences and the ability to serve customers anytime, anywhere was a basic consumer need now. So combining Vincommerce’s modern network and Masan’s 300,000 traditional points of sale across the country will help build a modern and seamless retail system to serve consumers, he added.

Thursday was the first time the Masan chairman has opened up about the group’s merger deal with Vietnam’s biggest private conglomerate Vingroup last December, which saw it acquire an 83.74 percent stake in Vincommerce.

Masan will set up a new entity which holds the majority stake in Vincommerce, and an 85.7 percent stake in Masan Consumer, Masan’s subsidiary which produces consumer goods. Masan will hold 70 percent of this entity, while Vingroup and other investors that previously held stakes in Vincommerce but transferred them to Masan, will own the remaining 30 percent.

Masan Group plans to have the new entity break even on an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) basis in 2020, but said it could close between 150-300 stores that are unable to break even or fail to meet traffic targets.

MSN shares of Masan Group on the Ho Chi Minh Stock Exchange had plummeted to floor price upon news of the merger deal on December 3, and the stock had lost 22.6 percent at the time of writing.

Several securities companies have said that although the merger deal is considered mutually beneficial to both parties in the long-run, investors are worried Masan’s short-term profitability will take a hit, as Vingroup’s retail business segment, mostly made up of Vinmart stores, has recorded losses for five consecutive years from 2014.

Latest financial reports showed that the segment has gone on to lose VND2.52 trillion ($108.76 million) for Vingroup in the first six months of 2019.

In a letter to Vincommerce employees in December, Vingroup had also said it will not hold a majority stake in the merged entity to focus resources on technology and industry.