Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

<ul><li>We highlight 27 Korean companies that are seeking to find new owners through M&amp;A in 2016. Key sectors of M&amp;A in Korea in 2016 include financials, shipbuilding, and logistics.&nbsp;Our analysis is based on publicly available information.&nbsp;</li><li>To recap the M&amp;A market in Korea last year, 427 M&amp;A deals were struck in 2015 worth nearly US$65 billion. 2016 is likely to fare even better.&nbsp;</li><li>Korea Inc. is becoming less of an octopus and more of a shark. Korea is still dominated by the chaebols but several chaebols such as the Samsung Group are clearly trying to become more of a shark (greater focus on key industries such as tech) and less of an octopus, being diversified in so many different industries.</li><li>Korean companies' top&nbsp;300 largest companies by market capitalization had cash of about 128 trillion won at end of 2015, up&nbsp;33% YoY.&nbsp;</li><li>Among the various M&amp;A sectors in Korea in 2016, we find logistics and securities sectors to be quite interesting. In the logistics sector, Coupang (private company) is really revolutionizing the entire competitive structure of the industry. The companies that have been competing in this&nbsp;old, dull industry of packing products in boxes and delivering them must compete effectively against Coupang and catch up to them in terms of customer service, speed, and execution or else exit the industry.</li><li>In the securities sector, the recent acquisition of KDB Securities by Mirae Asset Securities, should lead to greater consolidation of this industry. In addition, despite the weak brokerage market, the IPO and M&amp;A markets in Korea should flourish this year, barring severe economic distress. The Korean government is also trying to accelerate the M&amp;A market in Korea this year.&nbsp;The Korean National Assembly passed the revisions to the Commercial Code in November 2015 (effective March 2016) which should help to facilitate companies&rsquo; restructuring and investment through M&amp;A.</li></ul>

We highlight 27 Korean companies that are seeking to find new owners through M&amp;A in 2016. Key sectors of M&amp;A in Korea in 2016 include financials, shipbuilding, and logistics.&nbsp;Our analysis is based on publicly available information.&nbsp;To recap the M&amp;A market in Korea last year, 427 M&amp;A deals were struck in 2015 worth nearly US$65 billion. 2016 is likely to fare even better.&nbsp;Korea Inc. is becoming less of an octopus and more of a shark. Korea is still dominated by the chaebols but several chaebols such as the Samsung Group are clearly trying to become more of a shark (greater focus on key industries such as tech) and less of an octopus, being diversified in so many different industries.Korean companies' top&nbsp;300 largest companies by market capitalization had cash of about 128 trillion won at end of 2015, up&nbsp;33% YoY.&nbsp;Among the various M&amp;A sectors in Korea in 2016, we find logistics and securities sectors to be quite interesting. In the logistics sector, Coupang (private company) is really revolutionizing the entire competitive structure of the industry. The companies that have been competing in this&nbsp;old, dull industry of packing products in boxes and delivering them must compete effectively against Coupang and catch up to them in terms of customer service, speed, and execution or else exit the industry.In the securities sector, the recent acquisition of KDB Securities by Mirae Asset Securities, should lead to greater consolidation of this industry. In addition, despite the weak brokerage market, the IPO and M&amp;A markets in Korea should flourish this year, barring severe economic distress. The Korean government is also trying to accelerate the M&amp;A market in Korea this year.&nbsp;The Korean National Assembly passed the revisions to the Commercial Code in November 2015 (effective March 2016) which should help to facilitate companies&rsquo; restructuring and investment through M&amp;A.

2016 Korea M&A Market Outlook - What's For Sale?

Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

Equity Bottom-Up

<ul>
<li>The European Commission has confirmed it aims to make a preliminary decision on the proposed Korean Air/Asiana merger by 14 February.</li>
<li>Plans to sell Asiana Cargo may struggle to find a buyer, while the US has also highlighted concerns regarding the merger, and Japan has yet to provide approval.</li>
<li>We continue to highlight there is a strong argument for Korean Air continuing alone, as Asiana continues to struggle to achieve profitability, with a stretched balance sheet.</li>
</ul>


The European Commission has confirmed it aims to make a preliminary decision on the proposed Korean Air/Asiana merger by 14 February.
Plans to sell Asiana Cargo may struggle to find a buyer, while the US has also highlighted concerns regarding the merger, and Japan has yet to provide approval.
We continue to highlight there is a strong argument for Korean Air continuing alone, as Asiana continues to struggle to achieve profitability, with a stretched balance sheet.


Korean Air: European Merger Review Decision Not Expected Until Mid-February

South Korea

Asiana Airlines, Inc. provides air cargo and passenger transportation services throughout South Korea and overseas.  The Company also offers airline catering and on-flight duty free shopping services and operates aircraft leasing business.

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Asiana Airlines (020560 KS)

2016 Korea M&A Market Outlook - What's For Sale?

We highlight 27 Korean companies that are seeking to find new owners through M&A in 2016. Key sectors of M&A in Korea in 2016 include...

Douglas Kim

Korean Air: European Merger Review Decision Not Expected Until Mid-February

The Korean Air - Asiana merger saga continues with Europe confirming mid-February for a preliminary decision. We continue to see the scope for the...

Neil Glynn

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