Korean Businesses in Overseas Acquisition Drive

      July 14, 2010 09:53

      Korean companies are out hunting for overseas acquisition targets. Until the middle of last year, Korean firms were hobbled by the economic slump, but since then a large number of blue-chip companies overseas have been put on the auction block at attractive prices, and Korean businesses have been snapping them up.

      With many overseas companies still up for sale in the aftermath of the financial crisis, analysts forecast the spree will continue for some time.

      ◆ Retailers, Internet Portals

      In April NHN, which operates the popular Internet portal Naver, bought Japanese portal Livedoor from its owner LDH. And last month, Korea's top wireless carrier SK Telecom became the second-largest shareholder in Malaysian wireless broadband company Packet One Networks by acquiring a 25.8 percent stake for US$100 million. Samsung Electro-Mechanics bought a Chinese electronics parts maker in November last year, and Samsung Electronics acquired a Polish home appliance maker the following month.

      Korean retailers, which had concentrated their efforts on the domestic market, have also begun hunting for overseas acquisition targets. Korean lingerie maker Namyeung Vivien acquired its French partner Barbara last month. Vivien had been importing lingerie from Barbara and selling them here since 1998. And department store operator Lotte Shopping bought a controlling stake in Chinese supermarket operator Times in December for W730 billion (US$1=W1,212).

      The Yangzhou branch of Chinese supermarket operator Times, which was acquired by Lotte Shopping /Courtesy of Lotte Group

      ◆ Changing Markets

      Industry insiders say Korean companies are acquiring promising foreign businesses to bolster their competitive edge in the rapidly changing global market. A key example of this is steelmaker POSCO's purchase of a 70 percent stake in an Australian coal mine for 50 million Australian dollars (around W53 billion). POSCO had invested in several overseas mines, but this is the first time it had acquired a controlling stake.

      "This is our attempt to diversify our operations from steel to a wider range of materials," said POSCO managing director Kim Dong-man. SK Telecom bought Packet One Networks as part of its plans to increase its presence in Southeast Asia, analysts say.

      Amica, a Polish manufacturer of household appliances, acquired by Samsung Electronics /Courtesy of Samsung Electronics

      But price is also a factor. Barbara enjoyed annual sales of W70 billion, but last year, total revenues dropped to around W30 billion, allowing Vivien to buy Barbara for just 4 million euros. "Companies in the financial and service industries should also look for promising targets overseas and use the acquisitions to boost their competitive edge," said Kim Jong-nyun of the Samsung Economic Research Institute.

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