Korean Firms Inactive in M&As
By Park Hyong-ki
Staff Reporter
Korean companies are extremely slow in taking part in global merger and acquisition deals, according to a report released by the Korea Chamber of Commerce and Industry (KCCI).
In 2005, Korea only achieved overseas M&As worth $451 million, the smallest in takeover value compared with the United States, Japan and China.
It only accounts for 0.3 percent of the U.S. takeovers, which stood at $147.5 billion. Japanese companies acquired overseas entities worth $8.1 billion, while Chinese firms took over firms worth $5.3 billion.
Korea's overseas M&As only stood at 16 percent of the total, far behind other nations.
Sixty-five percent of U.K. companies' total M&As took place overseas, while 34 percent for Japanese firms and 25 percent for U.S. companies.
``The reason companies here find it difficult to expand through M&As both at home and abroad is due to high-level of anti-corporate sentiment and difficulties of financing such M&A projects,'' said the KCCI report.
Also, the chamber noted that the lack of information about the global market and its businesses is further putting the brakes on Korean companies in search of M&A opportunities.
``To expand further outside of the country, companies need to move away from old-style conservative management and actively find itself anew to fast changes on the global market,'' the report said.
It stressed the importance of domestic financial firms' role in financing funds for M&A deals initiated by companies here.
The public also needs to back Korean companies that are looking to expand overseas through M&As, as they add momentum and competitiveness to the nation's economic growth.
The most notable M&As that took place last year for Korea's neighbors were Toshiba of Japan taking over U.S. atomic power company, Westinghouse Electric, and China Electronics acquiring Philips Electronics' mobile phone business in the Netherlands.