The nation’s 30 largest conglomerates acquired 211 companies over the past three years, commanding more than 1,000 firms under their wings and pursuing more firms with technological prowess.
Politicians are raising their voices for chaebol reform amid the companies’ growing appetite for mergers and acquisitions, with the ruling Grand National Party reviewing plans to reduce the side effects of the removal of a cap on large conglomerates’ equity investment.
The top 30 business groups in asset value have added 442 new companies to their lineups since 2009, nearly half of which were through M&As, according to chaebul.com. The number of their affiliates rose from 975 to 1,150 in the same period.
CJ registered 39 new companies, 30 of which were acquired. LS and Hyundai Department Store also saw M&As account for three quarters of their newly added companies. The portions were 66.7 percent for Shinsegae, 61.5 percent for GS, and 60 percent for Lotte. Samsung, Hyundai Motor, LG, Hyundai Heavy and Hyosung also bought more companies than they established.
The number of companies acquired by corporations continued to surge from 40 in 2009 to 77 in 2010 and 94 last year.
The conglomerates say the M&As are aimed at strengthening their key business areas, but they often buy firms far from their trades.
“We have four main business areas ― food and food services, bio engineering, entertainment and media, and new distribution, and we have acquired companies appropriate for raising our key business potential,” a CJ official said.
CJ, however, bought a company that manages real estate in March last year.
Hyundai Motor purchased a firm in the livestock business sector in January 2009, Hyosung a property leasing company and SK a sleep aid product maker.
“Acquiring a company out of its business area could scatter funds, capacities and the management’s interest, and cause the conglomerate’s main business to lose competence,” said Lim Chae-woon, a Sogang University professor of business administration.
Joo Hyun, head of research on small and medium-sized ventures at Korea Institute for Industrial Economics and Trade, also said chaebol owners often use M&As as a means to transfer wealth to their successors.
By Kim So-hyun (
sophie@heraldcorp.com)
