Although the industry environment is rapidly changing, South Korean businesses are still sitting on their hands for M&A deals and restructuring.
According to a report titled “M&A trend and main features in the first half of 2016” released by the Korea Fair Trade Commission (KFTC) on September 18, there were only 134 cases of Korean firms’ M&As with non-affiliates. The figure was down by 20.2 percent from 168 deals in the first half of last year. The amount also dropped by as much as 46.5 percent to 12.2 trillion won (US$10.84 billion) from 22.8 trillion won (US$20.26 billion) last year.
In particular, the number of deals worth over 1 trillion won (US$888.49 million) was halved to 4 from 8 a year earlier. The number of M&A deals between affiliates, which are designed to restructure businesses, also decreased by 7.4 percent to 75 from 81 a year ago. Its amount stood at 800 billion won (US$710.8 million), down by a whopping 95.2 percent from 16.6 trillion won (US$14.75 billion) in the first half of last year. An official from the KFTC said, “Most M&As between affiliates are small deals worth below 100 billion won (US$88.85 million).”
Especially large business groups subject to cross-shareholding restrictions are more passive about the M&As than other business groups. The number of M&As achieved by large business groups stood at 59, down 11.9 percent from 67 last year. Its amount also decreased by 71.7 percent to 6.8 trillion won (US$6.04 billion) from 24.1 trillion won (US$21.41 billion) in the first half of 2015.
The number of South Korean companies’ M&As was down 16.1 percent to 209 and its amount also dropped 67 percent to 13 trillion won (US$11.55 billion). The figures of large business groups shrunk even more in terms of the amount of money. Last year, there were five M&As between affiliates worth more than 1 trillion won (US$888.49 million), including mergers between Samsung C&T and Cheil Industries, SK Holdings and SK C&C and Hyundai Steel and Hyundai Hysco. However, there is only one merger this year – Lotte Chemical’s acquisition of SDI Chemical.