Daemyung Sono Group invested 176 billion won to secure a 26.77% stake in T’way Air last year and is currently in negotiations with YeaRimDang to purchase its shares. (Image courtesy of Yonhap)
SEOUL, Feb. 21 (Korea Bizwire) — Despite a prolonged economic downturn and high interest rates, several prominent South Korean mid-sized companies are actively pursuing major mergers and acquisitions, highlighting a shift in corporate strategy.
The number of completed M&A deals valued at over 10 billion won in South Korea reached 474 in 2024, marking a 12% increase from the previous year, according to data compiled by Yonhap Infomax.
While M&A activity typically flourishes during periods of economic prosperity and low interest rates, recent market conditions have created a unique dynamic. As the prolonged economic slump increases the number of companies available for purchase, firms with sufficient capital reserves or strong investment ambitions for future growth are stepping forward as buyers.
Daemyung Sono Group, which operates 18 hotels and resorts across South Korea, exemplifies this trend. The company invested 176 billion won to secure a 26.77% stake in T’way Air last year and is currently in negotiations with YeaRimDang, the airline’s largest shareholder holding a 30.06% stake, to purchase its shares.
In another significant move, Hanwha Hotel & Resort signed a stock purchase agreement on February 11 to acquire a 58% stake in Ourhome, a major catering company, for 870 billion won.
The acquisition was reportedly spearheaded by Kim Dong-seon, vice president and third son of Hanwha Group Chairman Kim Seung-youn. The company aims to strengthen its hotel food and beverage operations and create synergies across its hospitality businesses.
“These M&A moves by Daemyung Sono and Hanwha Hotel represent a diversification strategy into similar or related business areas,” said Park Yong-rin, a senior research fellow at the Korea Capital Market Institute. “While they’re expecting synergies between resort operations and aviation, and between hotel business and food service, these investments are more focused on future potential than immediate profits.”
Woongjin Group, which has long sought growth opportunities, recently secured preferred negotiation rights from private equity firm VIG Partners for the acquisition of Preedlife, the country’s leading funeral service provider. While the acquisition price remains undisclosed, market estimates value Preedlife at approximately 1 trillion won.
However, experts caution about the risks of M&A activity during economic downturns. “The M&A market has been in decline since the second half of 2022 and hasn’t fully recovered,” noted Hong Seung-hwan, a partner at Samil PricewaterhouseCoopers.
“However, as interest rate and economic risks become more predictable, mid-sized companies and large business affiliates are beginning to emerge as buyers in the M&A market.”
The article also notes that Lotte Hotels & Resorts is considering the sale of its L7 and City Hotel properties as part of an asset liquidation strategy, with 11 such properties currently operating in South Korea.
In a separate development, Mohegan recently transferred control of Inspire Entertainment Resort to private equity firm Bain Capital after failing to meet loan commitments. Inspire reported sales of 219 billion won but posted an operating loss of 156.4 billion won in fiscal year 2024.
M. H. Lee (mhlee@koreabizwire.com)
