Korea sees sharp drop in M&A deals amid continued uncertainty

[Graphics by Song Ji-yoon]

South Korea’s merger and acquisition (M&A) market has dwindled over the past year, with the value plunging by more than 55 percent in the first quarter of 2024, an analysis showed on Sunday.

According to a league table compiled by Maeil Business Newspaper’s capital market tracker Radar M, the total volume of Korean M&A deals amounted to 4.81 trillion won ($3.6 billion) in the first quarter of 2024, based on management control transactions of over 5 billion won.

This figure is more than 55 percent lower than the transaction volume of 10.8 trillion won in the first quarter of 2023. It is also the lowest level since 3.03 trillion won during the same period of the pandemic-driven 2020.

There was also no big deal worth over 1 trillion won during the first quarter of 2024, signifying the shrinking investment market amid uncertainty over prolonged high interest rates and ongoing recession fears.

There was only one large deal exceeding 500 billion won during the cited period.

Orion Group acquired LegoChem Biosciences Inc. for 548.4 billion won.

The much-anticipated acquisition of Korea’s largest shipping company HMM Co. by Harim Group (worth 6.4 trillion won) fell through in February 2024, and subsequently, the integration between Hanmi Pharmaceutical Group and OCI Group (worth 770 billion won) and the sale of SK chemicals Co.’s pharmaceutical business unit (worth 600 billion won) were all canceled, further dampening market sentiment.

The global M&A market, on the other hand, has shown signs of resurgence, with blockbuster deals among large energy, semiconductor, and information technology (IT) companies.

According to London Stock Exchange Group plc, there were 11 mega-deals worth over $10 billion in the global M&A market in the first quarter of 2024, totaling $215 billion. This is more than double the five deals worth $100 billion in the same period of 2023.

The acquisition of Discover Financial Services LLC by U.S. financial firm Capital One Financial Corp. for $35 billion is a prime example. The rise in mega-deals pushed total global M&A volume to $690 billion in the first quarter of 2024, up 30 percent year-over-year.

“The global M&A market has recently rebounded with large deals in the technology and energy sectors, including artificial intelligence (AI),” said Jung Kyung-soo, head of Samil PwC‘s M&A Center. “However, transactions in these areas are still minimal in the Korean market, making it difficult to expect significant benefits.”