Corporate revival act fuels hopes for M&A market

[THE INVESTOR] The Special Act of Corporate Revitalization which took effect on Aug. 13 is raising hopes of the country’s mergers and acquisitions market receiving a much needed boost.

Aug. 16, the first working day since the act took effect, saw four companies, including Hanwha Chemical, apply for review for eligibility. 

In addition, industry sources say that some of the country’s largest conglomerates, including Hyundai Motor Group and Samsung Group, are reviewing ways to benefit under the new act.

Eligible companies with the new act are able to restructure their business portfolio with less influence from a wide range of regulations including those concerning taxation and fair trade. The act also offers a number of government support measures, including those related to job security, research and development and funding for companies seeking to renew their businesses. 

Among other requirements, a company must be operating within an industry weighed down by oversupply to benefit from the new act, which took effect on Aug. 13. An applicant must also be seeking to change the business portfolio as part of plans to improve finances and productivity. 


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Hanwha Chemical seeks benefit from new corporate revival act

With about 30 percent of the country’s industries estimated to be suffering from oversupply, the new act is feeding hopes that local corporations will take a more proactive approach to M&A actions, which have seen a rise this year.

According to CEO Score, a local website specializing in analyzing corporations, the country’s 30 largest conglomerates were involved in 17 M&A actions with a combined value of 7 trillion won (US$6.4 billion) through July this year.

In comparison, 27 M&A actions with a combined value of 4.2 trillion won were taken in all of last year.

By Choi He-suk (cheesuk@heraldcorp.com)