Foreign investors are actively seeking to merge and acquire South Korean companies despite concerns over the Terminal High Altitude Area Defense (THAAD) issue and the threat of nuclear missile attack by North Korea. South Korean firms are still attractive investments to foreign investors and the fact is not much adversely affected by the THAAD or North Korea risks.
According to a report regarding to mergers and acquisition (M&A) deals between the first quarter and the third quarter of 2017 released by M&A market researcher Merger Market on October 30, the number and value of South Korea’s inbound M&A deals by foreign investors stood at US$7.8 billion (8.77 trillion won) with 35 cases, up 130.1 percent from US$3.4 billion (3.82 trillion won) with 39 cases at the same period a year ago.
Global consumer goods giant Unilever made the biggest inbound deal this year. The company acquired a 95.39 percent share of Carver Korea Co., maker of AHC skincare products. The deal accounted for 32.6 percent of the total domestic inbound deals made. In September, Unilever Global took over Carver Korea from a consortium led by U.S.-based private equity firm Bain Capital and Goldman Sachs Group at 2.27 billion euro (US$2.7 billion or 3.05 trillion won).
A remarkable number of acquisition deals for management rights and shares of domestic companies were also made by global private equity giants in the first half of this year. Global leading private equity fund Kohlberg Kravis Roberts (KKR) & Co. bought shares of LS Automotive Corp. and the copper foil and flexible copper clad laminate business under LS Mtron Ltd., a subsidiary of LS Group, at 1.05 trillion won (US$935.5 million).
In addition, Affinity Equity Partners, an Asia-focused private equity firm based in Hong Kong, acquired Lock & Lock Co., South Korea’s leading food container maker, at 629.3 billion won (US$560.52 million).
However, domestic investment banking industry (IB) sources say it will still take some time for foreign companies to invest in South Korean companies in earnest.
A senior official from the IB industry said, “A considerable number of Chinese companies and investors have delayed and called off the deals with South Korean companies, which were supposed to be made earlier this year, due to the THAAD issue. However, foreign investors in other countries are still inquiring and making an investment in South Korean companies, though Chinese investors hesitate to make the move.”