According to the M&A league table Bloomberg released on October 4, the M&A transaction value for the first three quarters of this year totaled US$41.89 billion in South Korea, down 53% from a year ago, and a total of 1,055 M&A deals were signed during the period in the country. In the third quarter, the merger between LG Chem and LG Life Sciences, worth US$1.304 billion, was the largest one.
The total value reached a 10-year high of US$63.5 billion in the first half of last year and has continued to decline since then. This can be attributed to government-led corporate restructuring. “Companies are hesitating about sizeable M&A deals with major shipping companies undergoing restructuring processes and shipbuilders having to face the same matter soon,” said a local private equity fund manager.
These days, the South Korean M&A market is being led by sectors less sensitive to a change in industrial environment. For example, SK Networks recently acquired Tongyang Magic, a consumer electronics manufacturer and rental service provider, for 619 billion won from Glenwood Private Equity and NH Private Equity.
The other reasons for the stagnation in the market include leading business groups’ aggressive sale of non-core business units and assets and passive investment strategy, which are attributable to mounting economic uncertainties resulting from Brexit and the deployment of a THAAD system in the Korean Peninsula.
In the local M&A advisory market, in the meantime, Credit Suisse recorded a market share of 10.71% by arranging contracts worth a total of US$5.34 billion. It was followed by Mirae Asset Daewoo (9.02%) and Morgan Stanley (7.6%).