South Korean mergers and acquisitions (M&A) markets remained subdued in 2020, with the Covid-19 pandemic depressing the value and volume of completed deals.

A total of 436 transactions worth 49.3 trillion won ($45.3 billion) were finalized during the year, according to thebell’s league tables, a drop of 19 deals and about 3.1 trillion won from the same period in 2019. It is the second consecutive year that the market has shrunk, after it handled transactions worth about 59 trillion won in 2018.

Only seven multi-trillion-won deals were completed in 2020, including the acquisition of Daesung Industrial Gases by Macquarie Korea Opportunities Investment, Netmarble’s acquisition of Woongjin Coway, a merger of SK Broadband and T-broad, and SK Networks’ sale of its gas station business.

The pandemic had a deep impact on the M&A industry, hitting the aviation industry especially hard. A planned 2.5 trillion-won sale of Asiana Airlines fell through and a legal action is pending by Hyundai Development Co against creditors of the airliner. Low-cost carrier Jeju Air also abandoned its acquisition of cash-strapped Eastar Jet and a legal battle is underway over that deal.

Waste management was one of the hottest sectors. KKR completed the acquisition of ESG Group from Anchor Equity Partners for 875 billion won, Affirma Capital offloaded EMC Holdings to SK Engineering & Construction for about 1 trillion won, and Macquarie Private Equity sold Koentec and Saehan Environment to a consortium of IS Dongseo and E&F Private Equity for approximately 510 billion won. 

Cross-border deals accounted for 21% of all transactions completed in 2020, with outbound deals accounting for 9.4% and inbound deals 10.6%.

Large private equity firms take the lead

Large-sized PE firms were active in the M&A market in 2020, led by MBK Partners and Hahn & Company. MBK Partners exited Daesung Industrial Gases after three years, selling the company for 2.5 trillion won in the largest M&A deal in 2020.

Hahn & Co acquired SK Chemicals’ biofuel unit and took over Korean Air Lines’ in-flight businesses for nearly 1 trillion won. The buyout firm also launched a 1 trillion won project fund in conjunction with Hana Financial Group that will acquire an entire stake in H-Line Shipping to provide an exit opportunity for existing limited partners.

Affirma Capital sold waste management company EMC Holdings to SK Engineering & Construction for 1.05 trillion won, marking the PE firm’s first exit deal with a value of more than 1 trillion won.

Kim & Chang continued to top the M&A legal advisory league tables after working on most of the big-ticket deals, including the sales of Daesung Industrial Gases, Coway, KCFT, SK Networks’ gas stations, Orange Life and EMC Holdings. Lee & Ko and Yulchon secured second and third positions respectively.

Credit Suisse topped the M&A financial advisory league tables and the second spot was taken by Morgan Stanley. The gap between the two was about 347.4 billion won.

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 71 deals, while Samil PwC advised on 60 deals. Deloitte Anjin sat in fourth spot, followed by EY Han Young. (Reporting by Byung-yoon Kim)