M&A deals in South Korea hit 7-year low in 2024

South Korea’s mergers and acquisitions market shrank further in 2024, with leading business groups seeking to unload non-core assets to bolster liquidity. Investment firms struggled to raise funding amid the weakening Korean won, sluggish exports and political uncertainties.

M&A deals executed by the top 20 Korean conglomerates sank to their lowest level in seven years in terms of value in 2024, according to a study by Market Insight, the capital market news outlet of The Korea Economic Daily.

Buyouts and minority stake investments by the 20 business groups amounted to 4.82 trillion won ($3.3 billion) in 2024, notching their lowest level since 3.64 trillion won in 2017, the study found.

The 2024 figure is down 21.9% from the year prior, bucking the trend of the global M&A market, which logged a 10% rise to $1.6 trillion in the first nine months of this year, according to Boston Consulting Group.

On the buy side, the sharp decline of the Korean currency and lackluster domestic stock market challenged fundraising plans, discouraging them from chasing acquisitions and massive investments.

Investments in semiconductor, rechargeable battery and bio companies — deemed as next-generation growth drivers for Korean companies — nearly halted this year, said investment bankers.

“As business dynamics have declined (in Korea), it has become difficult to even narrow down investment candidates,” said a private equity firm official.

Hyundai Motor Group was the only Korean conglomerate to spend at the billion-dollar-level on an overseas company this year. It injected 1.3 trillion won into Motional, its loss-generating self-driving joint venture with Aptiv PLC, to raise its stake.

Nine of the 20 largest business groups, as classified by Korea Fair Trade, did not conduct an M&A deal this year.

Lotte Group, facing a liquidity shortage, focused on selling assets, including its car leasing unit Lotte Rental Co., making an about-face from its buyout spree over the past few years.

In search of better returns, MBK Partners, one of the most active buyout firms in North Asia, targeted Korea Zinc Inc. with the aim of boosting its enterprise value through improved governance.

“The deal drought is expected to continue next year. Along with the economic slowing, the impeachment (of President Yoon Suk Yeol) and the beginning of Donald Trump’s second term added to the uncertainty,” said an investment banker.

Write to Ji-Eun Ha and Jong-Gwan Park at Hazzys@hankyung.com
 
Yeonhee Kim edited this article.