By Lee Hyo-sik
Lotte Group, Korea’s fifth-largest family-controlled conglomerate, has been most aggressive in acquiring companies over the past five years, expanding its reach across retail, confectionary, construction, logistics, chemical and other industries.
According to Chaebol.com, a corporate research information provider, Monday, Lotte took over 19 firms from 2010 through 2014, the largest among the country’s top 10 business groups. The group had a total of 81 affiliates last December.
Of the 19, the conglomerate acquired Himart, Korea’s largest electronics retailer, in December 2012 and changed its name to Lotte Himart. In 2010, the group took over convenience store franchise By The Way and integrated it into its Seven Eleven chain.
Not only Lotte, but other conglomerates have been active acquiring other businesses to boost the competitiveness of their existing units or advance into high-growth sectors.
GS Group, the seventh-largest group specializing in refinery, retail and construction, acquired 15 companies such as Incheon Energy from 2010 to 2014, while LG Group bought The Face Shop, Haitai Confectionary & Food and 12 other businesses.
Hyundai Motor Group took over Hyundai Engineering & Construction, Hyundai Engineering and 11 other companies, followed by SK Group with 11 and Samsung with seven.
In total, 592 companies affiliated with top 10 business groups acquired a combined 98 companies. In the first seven months of this year, they were involved in 19 mergers and acquisitions (M&A).
Analysts said large business groups sitting on huge cash piles will continue to acquire other companies in the coming years, stressing they should focus more on creating synergy with their existing units.
“Conglomerates should refrain from recklessly expanding their size through M&A,” said an executive at a major business association. “Instead, they need to place top priority on generating positive synergy effects with existing companies when they consider acquiring other businesses. At the same time, business groups should pay greater attention to honing their core competitiveness and nurturing future growth engines.”
In contrast to M&A activities, conglomerates have become reluctant to establish affiliates. Top 10 business groups set up 19 units in 2014, down from 25 in 2013, and 42 in 2010. In the first seven months of 2015, they established 13.