"No Future"... M&A of Korean Companies Less Than Half of G5 Average

Only 1,063 M&A Deals by Korean Companies in the Past Decade
One-Third of the US, the G5 Leader
M&A Amount Also at $273.7 Billion, Just 25% of the G5 Average

[Asia Economy Reporter Jin-ho Kim] Over the past decade, the number and value of M&A (mergers and acquisitions) deals by Korean companies have fallen far short of the G5 (United States, Japan, France, Germany, United Kingdom) average. In particular, there have been no M&A achievements even in so-called new industries such as healthcare, which are classified as future growth engines. Calls are being made to improve the institutional environment that hinders M&A, such as holding company regulations.

According to the Federation of Korean Industries on the 10th, the number of M&A deals by Korea's top 100 non-financial companies by sales over the past 10 years was 1,063. This is only 41% of the G5 average (2,598 deals).

Among the G5, the United States recorded the highest number with 3,350 deals. Japan (3,202 deals), France (2,764 deals), Germany (1,967 deals), and the United Kingdom (1,707 deals) followed.

During the same period, Korea's M&A value was $273.7 billion, only 25% of the G5 average ($1.093 trillion). The United States had the largest scale at $2.8815 trillion, while Korea was at half the level of France ($526.2 billion), the lowest among the G5.

In particular, most of Korea's M&A activities were concentrated in existing industries. There was not a single M&A deal in so-called future growth 'new business' sectors such as healthcare. While the top four industries by M&A value in the G5 were ▲Healthcare (new industry) ▲Communication (new industry) ▲Industrial goods (existing industry) ▲Essential consumer goods (existing industry), Korea showed strength only in the industrial goods sector.

By country, the United States and Germany had the largest M&A values in healthcare, while Japan and the United Kingdom led in communication.

Accordingly, the Federation of Korean Industries argued that regulations should be eased to promote entry into new industries through M&A. It pointed out that active support is needed for Korean companies to enter new industry sectors through aggressive M&A.

Unlike foreign countries, in Korea, when promising small and medium-sized venture companies are incorporated into large business groups, they become subject to various large business group regulations such as holding company regulations and prohibitions on support activities between affiliates.

Yoo Hwan-ik, head of the Industry Division at the Federation of Korean Industries, said, "Compared to the G5, M&A is relatively sluggish, and this is analyzed as a major factor due to the institutional environment," adding, "Related regulations should be eased to allow active M&A and entry into new industry sectors."

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