South Korea’s mergers and acquisitions (M&A) activity continued to slow during the third quarter of 2020, with the value and volume of completed deals both declining significantly due to fallout from the Covid-19 pandemic.
The total value of M&A deals was 61 trillion won ($52.5 billion) in the first nine months, from 377 accumulated transactions, according to thebell’s league tables, which are based on deals that have been completed. The number of deals decreased by 48, but the value increased by approximately 1.5 trillion won compared with the same period last year.
This was largely due to a sharp increase in the total value of closed deals in the first quarter, which jumped 10 trillion won to about 33 trillion won. The value has dropped to about 15 trillion won since the second quarter of this year, though the impact of this decline on the entire M&A market was partly offset by a number of big ticket deals.
Two multi-trillion-won deals were completed in the third quarter, including KB Financial Group’s acquisition of Prudential Life Insurance Company of Korea for 2.34 trillion won and Shinhan Financial Group’s sale of new common equity shares worth 1.2 trillion won to Affinity Equity Partners and Baring Private Equity Asia.
The aviation industry has been one of the hardest hit by the Covid-19, as it led to the cancellation of two much-anticipated M&A deals involving the sales of debt-ridden Asiana Airlines and Eastar Jet.
Asiana Airlines is expected to be placed under the control of creditor banks and undergo restructuring before it is put on the market again, after its sale to HDC Hyundai Development collapsed recently. Jeju Air formally abandoned a planned takeover of Eastar Jet in July amid uncertainty over the normalization of passenger air travel and opposition from shareholders.
Bucking the trend, acquisitions of domestic waste companies garnered strong attention. In the third quarter Anchor Equity Partners sold Eco Green Holdings to KKR for 876 billion won and Macquarie Korea Asset Management sold Koentec and Saehan Environment for 502 billion won.
Morgan Stanley topped the M&A financial advisory league tables, working on deals worth 7.1 trillion won during the first nine months. Second spot was taken by Credit Suisse, with deals worth 6.78 trillion won. Credit Suisse might have overtaken Morgan Stanley if the 2.5 trillion won acquisition deal of Asiana Airlines had not fallen through.
In the M&A accounting advisory league tables, Samjong KPMG and Samil PwC secured the number one and two positions respectively. Samjong KPMG advised on 49 deals worth 14 trillion won during the first nine months of this year.
Kim & Chang continued to top the M&A legal advisory league tables, working on most of the big-ticket deals in this period, including the acquisition of Prudential Life Insurance and the sale of MagnaChip’s foundry business. It also advised on the Eco Green Holdings and Koentec and Saehan Environment deals.
Lee & Ko secured second position, advising on the sale of Oceanbridge and the acquisition of MagnaChip’s foundry business, among other deals. (Reporting by Byung-yoon Kim)