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Half of M&As by Listed Firms Are between Affiliates
Only 11% of M&As Involve Foreign Firms
Half of M&As by Listed Firms Are between Affiliates
  • By Choi Moon-hee
  • November 13, 2019, 09:14
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About a half of the mergers and acquisitions (M&As) carried out by domestic listed firms since 2016 were between affiliates of the same business groups.

About a half of the mergers and acquisitions (M&As) carried out by domestic listed firms since 2016 were between affiliates of the same business groups. Inter-affiliate M&As were more frequent especially among conglomerates with an asset of at least 5 trillion won.

The Financial Supervisory Service (FSS) announced on Nov. 12 that 992 M&As worth 86.3 trillion won were conducted by listed firms from 2016 to June this year. The number of M&A deals per year was between 280 and 290, with smaller M&As taking place steadily.

There was a wide variation in the value of M&A deals made per year. Last year, when mega M&As worth one trillion won or more were frequently carried out, the aggregate value of M&As reached 38.7 trillion won, but it dropped to 7.3 trillion won in the first half of this year.

By type, share transfer was the most common with 47.0 percent, followed by mergers with 28.1 percent and spinoffs with 13.3 percent. Firms in the KOSDAQ accounted for 65.5 percent and firms in the KOSPI 30.8 percent. By industry, the manufacturing industry accounted for 48.3 percent, the non-manufacturing industry 39.7 percent and the financial industry 12.0 percent.

Inter-affiliate M&As accounted for 402 cases, about 49.5 percent of the 812 cases which excluded 132 spinoffs and 48 SPAC mergers from the total 992 M&As from 2016 to June this year. Especially, up to 76.2 percent of the inter-affiliate M&As were conducted by conglomerates. “Conglomerates have used M&As for internal reorganization,” the FSS explained.

M&As with foreign companies made up 11 percent of total share and business transfer transactions. However, some conglomerates’ large-scale M&A deals with foreign companies from 2016 to June this year -Samsung Electronics’ acquisition of US firm Harman, SK Hynix’s participation in the consortium that purchased Japan’s Toshiba Memory and KCC consortium’s acquisition of US firm Momentive- were not included in the statistics because they did not submit a relevant report on the ground that their acquisitions were worth less than 10 percent of their total assets.

“In order to boost our economy through M&As, M&A deals with external firms should predominate ones made between affiliates,” said the FSS, adding “Especially big companies should play an important role in launching new businesses and securing new growth engines.”