Consideration Factor for M&A
Employment guarantee is emerging as a prerequisite for M&A in South Korea. According to the Seoul Bankruptcy Court, stock sales for most of the 21 M&A cases since the establishment of the court have been completed or are underway with employment guarantee taken into account.
During the recent selection of the preferred bidder for the sale of SK Securities, CAPE Investment & Securities seized the chance by scoring higher in terms of employment guarantee although it suggested a lower price than local PEF Q Capital Partners. Last year, SK Networks successfully acquired Tong Yang Magic by ensuring the employment of its executives and staff members, too.
These days, an increasing number of labor unions are expressing their support for potential acquirers that can contribute to corporate competitiveness and job creation during the course of M&A. Such examples include Samsung Fine Chemicals union members’ declaration to cooperate with Lotte Chemical that was made in 2015. At that time, Lotte Chemical promised to maintain the employment of those working for the chemical business unit of Samsung SDI, Samsung Fine Chemicals, and Samsung BP Chemicals to win them over.
During the sale of Daewoo Securities in 2015, Daewoo Securities union members stated their opposition to Korea Investment Holdings and Mirae Asset to support KB Financial Holdings, which promised to maintain their employment and enhance the corporate value of Daewoo Securities. More recently, SK Securities union members boycotted Q Capital Partners during the selection of the preferred bidder, claiming that the PEF is more likely to resell their company.
“Since the Asian financial crisis in 1998, South Korean labor unions have learned that employment guarantee is the second-best option for them,” said an industry expert, adding, “Likewise, employers have learned that employment guarantee is a better option in view of the disputes and social criticism that follow when they provide no employment guarantee.”