Japan boosting economy by South Korean takeovers

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Main headquarters of Korea Development Bank (Yeouido) in Seoul, South Korea. Photo - TradeKorea.com

Earthquake-hit Japanese companies are looking for diversified sources of goods and a strong background to bank upon, hoping?increased takeovers on the Korean peninsula will not only boost manufacturing but also create a stable production base for organisations, Korea Development Bank said in its report on acquisitions of South Korean assets by Japanese companies.

Various investment areas include alternative energy and manufacturing leading to bigger amounts of mergers and acquisitions in future as well. According to Bloomberg, a decline of 13 percent in the value of won against yen in the third quarter helped economic activity but also shows how badly the Korean currency performed among the 10 most traded Asian currencies.

The March earthquake and tsunami led to factory closures, supply chain disruptions and nuclear crisis. Beating a previous record of $768 million in 2009 with 18 transactions, the Japanese acquisitions reached a record of $792 million, taking up the level of takeovers by 83 per cent from 2009, said Bloomberg.

Korea Development Bank (KDB) has been ranked as the top merger and acquisition adviser this year, jumping from the 30th rank last year. The South Korean bank arranged deals worth $7.96 billion this year in comparison to last year?s $ 168 million, with 18 per cent market share, says Bloomberg data.


Tokyo-based Toshiba Corp.?s $35 million investment in South Korean wind maker Unison Co. through convertible bonds too includes the list of the deals brokered by KDB. Toshiba?s alliance would give it distribution rights for Unison?s generators worldwide.

Seoul-based bank believes that while global investment banks are retaining their dominance for cross-border deals, domestic firms will continue expanding their share for local deals. The bank seeks strength from a wider network of operators, better understanding of local partners and services at lower costs than overseas rivals.

South Korea?s takeover advisory market this year includes KDB, Samsung Securities Co. and Woori Investment & Securities Co. whereas last year the list was totally different with organizations like Bank of America?s Corp.?s Merrill Lynch, KPMG Corporate Finance and Morgan Stanley, as per Bloomberg data.

Sources: Bloomberg

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