Daewoo Seeks to Arrange Cross-Border M&A
By Kim Tae-gyu
Staff Reporter
Daewoo Securities, one of Korea's major brokerages, plans to arrange sales of local blue-chip companies to neighboring nations, according to its CEO Kim Sung-tae.
``Companies in Japan and China are showing interest in taking over our quality corporations,'' Kim said at a press conference at the 63 Building in Yeouido, Seoul, Thursday.
``In particular, they are seeking technology-intensive firms. We know mergers succeed only two or three times out of 100 trials. But we already have cases with favorable odds,'' he said.
In order to facilitate such cross-border mergers and acquisitions (M&As), Seoul-based Daewoo plans to set up a branch in Beijing while strengthening one in Tokyo.
``We got the green light from the Chinese government to set up a branch in Beijing, which is expected to open in March or April,'' Kim said.
In addition, Kim said Daewoo established an M&A division late last year, composed of 15 experts. ``They are aggressively working to secure a deal list.''
Kim said that the M&A market would provide a source of revenue, as many firms are undervalued in the midst of the global financial storm.
However, some raise concerns that such efforts may be limited due to the long-lasting debates on technology leaks to foreign countries ― especially China that is quickly narrowing the technological gap with Korea.
Recently, controversies with regard to technology leakages have swirled involving Ssangyong Motors, the nation's fourth-largest automobile manufacturer, acquired by Shanghai Automotive Industry Corp. (SAIC) in 2004.
The trade union of Ssangyong, which applied for court receivership early this month, has contended the motor company transferred key technology to SAIC, China's No. 2 automaker, against Korean law.
In 2003, the sale of Hydis, the liquid crystal display unit of Hynix Semiconductor, to China's BOE Group, generated a similar dispute over technology outflow.
Orion Electric, a TV module producer and former affiliate of the defunct Daewoo Group, also caught attention when Chinese outfits tried to snatch it in 2003.
``Daewoo needs to remember Ssangyong and Orion before the cross-border M&A,'' said a Seoul analyst who asked not to be named.
``In particular, Orion was its former sister company. Daewoo could learn from the case,'' he said.