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Industrial shift to heat up Korea’s M&A market: experts

Investment banks keeping close eye on Yogiyo ‘megadeal’

Yogiyo motorcycles parked in front of a branch office as drivers wait for delivery orders. (Yonhap)
Yogiyo motorcycles parked in front of a branch office as drivers wait for delivery orders. (Yonhap)
Brisk merger and acquisition activity is expected this year in an ongoing industrial shift that is being accelerated by the pandemic, according to outlooks from investment banks Sunday.

While the aviation industry has taken the hardest blow from the pandemic, Korean Air is speeding up the process of taking over Asiana Airlines. On Thursday it submitted stock acquisition documents to antitrust authorities in nine regions where the carrier flies for a merger review. The countries include South Korea, the US, the EU, Japan and China.

To conclude the merger deal, Korean Air has to obtain approval from at least four foreign countries. If the country’s No. 1 carrier obtains the necessary approval to go ahead, Korea will have a megacarrier ranking among the world’s top 10 by fleet.

Financially troubled budget carrier Eastar Jet, which has applied for court-led rehabilitation proceedings, is predicted to kick off its sale process as early as the first half of this year, the investment banking sources said. The low-cost carrier has had difficulty finding a strategic investor since July, when Jeju Air scrapped its acquisition plans.

The country’s second-biggest delivery player, Yogiyo, run by Germany-based Delivery Hero, has come under the spotlight as one of the major domestic megadeals of 2021. Its estimated market value is worth around 2 trillion won ($1.81 billion).

In the fast-growing food delivery market, the investment banking industry forecasts that competition among global buyers will intensify. The total value of orders placed on food delivery apps here is estimated to have reached 11.6 trillion won last year, 10 times higher than the figure seen in 2015, a recent Hyundai Motor Securities report showed.

Investment bank sources foresee that both the total number of M&As this year and their value will outpace average figures. Since the Fair Trade Commission is set to introduce more stringent evaluations next year, more deals are expected in the local market toward the end of this year, they said.

So far, if the acquiring firm has less than 30 billion won in annual sales or total assets, the buyer does not require screening by the antitrust agency. But as of next year, M&As worth more than a certain amount will have to undergo FTC evaluation regardless of the buyer’s status.

By Jie Ye-eun (yeeun@heraldcorp.com)
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