Korea’s inbound M&A activities plunge in value

The value of merger and acquisition deals in South Korea plunged 57.5 percent as of the third quarter of this year compared to a year earlier, said a report by Mergermarket on Wednesday.

There were a total of 247 M&A deals in the Korean market for the first nine months of the year. The aggregate value of the deals stood at $32.2 billion, down from $75.8 billion from the same period in 2015. 

Despite the drop in numbers, this was still the country’s third-highest first quarter to third quarter value recorded by Mergermarket since 2001, it said.
LG Life Sciences’ $ 1.2 billion merger with LG Chem led the pharma, medical & biotech sector to become the most-targeted sector by value during the third quarter of 2016 at $1.9 billion across 8 deals.

The shipbuilding sector was the most-targeted sector throughout the first quarter to third quarter period by deal count, with 77 transactions valued at $ 5.9 billion.

“Korean shipbuilders continued to sell off noncore assets in an effort to reduce their debts and (this) is a trend likely to continue throughout the fourth quarter,” the report said.

Korean technology firms were the most attractive to foreign investors with $ 1.5 billion being spent on 10 investments during the first nine months of 2016, according to the report.

“This was largely due to the $1.1 billion acquisition of S-Printing Solution by US-based HP from Samsung Electronics, which was the year’s largest inbound deal to-date,” it said.

Alongside inbound activities, Korea’s outbound M&A has also seen a slight dip, with $3 billion across 30 deals taking place, representing a 10.3 percent drop in on-year value.

Takeovers by 11 Korean companies totaled $1.7 billion during the third quarter, accounting for 57.7 percent of total outbound M&A activities.

Korean companies are seeking investment opportunities outside of their home ground, giving outbound activities the potential to swing upwards, the report pointed out.

“Samsung Electronics is one such company that is holding talks outside of South Korea as it discusses acquiring Italy-based Fiat Chrysler Automobiles’ auto parts division, Magneti Marelli worth $1 billion,” the report said.

By Song Su-hyun (song@heraldcorp.com)