Year-end Fireworks M&A "Multi-party Competition Heats Up for Every Deal"... Will Transaction Volume Surpass 50 Trillion?

[Asia Economy Reporter Lee Seon-ae] The merger and acquisition (M&A) market is heating up as the year-end approaches. With growing warnings about liquidity next year, there is a strong market sentiment to close deals before the year changes, leading to fierce competition in the final acquisition battles. If major deals are completed by the end of the year, this year's M&A transaction volume is expected to surpass 50 trillion won, already exceeding last year's figures.

According to the investment banking (IB) industry on the 22nd, major deals scheduled for year-end include Danawa, TmaxSoft, and Daekyung O&T. Private equity fund (PEF) managers, who have driven this year's M&A market momentum, are actively participating, resulting in multi-party bidding for each asset.

On the afternoon of the 18th, the first-generation e-commerce platform Danawa held its final bidding, attracting multiple candidates such as Korea Center, KG Group, and VIG Partners. The shares for sale include 51.3% held by major shareholders: Chairman of the Board Seongjanghyun, CEO Son Yunhwan, Director Namgungwon, and Jeon Gyeonghee. The sellers expect a sale price exceeding 500 billion won, including a control premium. Danawa is regarded as a prime company generating an annual EBITDA of 35 billion won, and buyers' strong acquisition intentions suggest the deal will likely close by year-end.

For the sale of controlling interest in TmaxSoft, a representative IT company of Korea's first venture generation, Bespin Global, Macquarie Asset Management, MBK Partners, and Skylake Equity Partners have been shortlisted, creating a four-way competition. The final bidding will take place soon. The shares for sale include 28.9% held by Chairman Park Daeyeon and 24.05% held through Tmax Group affiliate TmaxData, totaling 60.7%. The market price discussed is approximately 1 trillion won.

The acquisition battle for biodiesel company Daekyung O&T, held by Stick Investment, is also intense. Two major oil refiners, IMM Investment, Eugene PE, and Mirae Asset Venture Investment's private equity division are included in the shortlist. The sale includes 100% of Daekyung O&T shares, comprising 70% held by Stick Investment and 19.72% held by former CEO Kim Chang-yoon. Recently, the transaction amount has been mentioned to reach around 500 billion won, increasing the company's valuation.

Additionally, Hanon Systems, Hyundai LNG Shipping, and Burger King are also on the market, and SM Entertainment will soon be acquired by CJ ENM. CJ ENM is expected to sign a memorandum of understanding (MOU) soon to purchase approximately 630 billion won worth of shares from Lee Soo-man, SM Entertainment's Chief Producer.

This year's M&A market has been exceptionally hot. Riding on liquidity, not only PEF managers but also large corporations have jumped into M&A, with platform assets like eBay Korea and Job Korea flooding the market. The transaction volume for corporate control acquisitions completed by the third quarter (January to September) has surpassed 34 trillion won, already exceeding last year's 27 trillion won range. The number of deals during the same period reached 271, surpassing last year's total of 247. It is expected that the full-year transaction volume will comfortably exceed the mid-40 trillion won range and could reach up to 50 trillion won.

An IB industry insider said, "With the U.S. tapering (asset purchase reduction) and ongoing tightening trends worldwide, there is anxiety that liquidity will not be as abundant as this year, accelerating year-end acquisition battles. The assets on the market are attractive, and since there will be no teaser letters for next year's deals, PEF managers are strongly motivated to use their dry powder (undrawn funds within their funds)."

This content was produced with the assistance of AI translation services.