ices, so on—have all picked up a lot of steam,’ says Yong
Suk Oh, the managing partner of Bae, Kim & Lee LLC.
‘In a lot of ways you can see there isn’t the kind of liq-
uidity there was pre-Lehman, but things are busy and
the trends are good.’
During 2009, there were a number of corporate-
restructuring projects in the construction and shipbuild-
ing industry as well as for large companies whose debt
ratio was relatively high. In the financial services sector,
the number of IPOs and other capital-market transac-
tions dramatically decreased and there was almost no
large-scale M&As in 2009.
‘Roughly speaking, I’d say that the balance of power,
in the M&A field, shifted slightly to strategic investors,
over financial investors,’ comments Yong Suk Oh. ‘M&A
has been picking up since the autumn, but, so far, more
deals have tended to involve strategic buyers—manu-
facturers, retailers—than in past years.’
One major exception to the general state of M&A in
2009 both in terms of deal value and sophistication was
KKR’s $1.8bn takeover of OB, one of the largest brew-
eries in Korea, which was also KKR’s first major deal in
Korea. KKR led the deal and teamed up with Affinity
Equity. Another major M&A deal was eBay’s US$1bn
acquisition of Gmarket, one of the largest online mar-
ketplaces in Korea.
‘Due to the unstable fluctuations in the foreign
exchange rate after the financial crisis, there were a significant number of lawsuits involving foreign-currency
derivative products between the banks and companies,
which are still pending,’ comments a partner at Kim &
Chang. ‘Also, many financial investors who suffered
substantial losses from the stock-related funds brought
a number of lawsuits against asset-management firms
or dealers. On the other hand, those companies whose
financial structures were relatively stronger were active
in the outbound M&A market.’ In addition, some state-owned companies and private companies made investments in energy and overseas real estate.
The capital markets picked up in the Spring of 2009.
‘A major reason for this was a series of overseas offerings
by commercial banks (for which the government
offered backing, till later in the year) and some of the
largest companies, such as KEPCO and POSCO,’
explains Yong Suk Oh.
IPOs also picked up in the second half of 2009. There
were several major IPOs of Korean companies with
tranches directed to overseas investors, such as SK C&C
and Jinro. Also, several Chinese enterprises, or overseas
holding companies with their operations mainly in
China, went public on the Korea Exchange. ‘This is an
interesting development and may mark a trend. We
have been getting more inquiries from offshore, and in
particular from China-based firms, about the Korea
Exchange,’ adds Yong Suk Oh.
FUTURE
The economy turned a corner around the middle of
2009 and optimism is high for the future. ‘Because
Korea’s stimulus was funded from eight years of surpluses, there is added optimism that there is still some
cushion if there is a second dip,’ adds Chang Rok Woo.
‘The number and volume of M&A and capital-market
transactions is not to be compared to those in 2006 or
2007,’ says a partner at Kim & Chang. ‘However, it is
likely to increase in 2010. There will likely be more out-
bound M&As, real estate investments, and energy and
resource developments. Work-outs and corporate-
restructuring works will continue to increase.’
‘Recently Samsung Electronics, the nation’s biggest
exporter, has been seeing its stock price reach historical
highs,’ says Yong Suk Oh. ‘On the whole, people are
optimistic in Korea, and, along with most businesses, all
the major law firms are planning for growth.’
Indeed the major law firms are gearing up for a
change in the legal landscape. The Korean legal market
is to open up to foreign law firms soon. For EU based
law firms, that is right around the corner, thanks to the
EU-Korea FTA. EU based law firms are expected to start
setting up in the coming months. For US firms, whether
or when Korea opens up will depend on the US-Korea
FTA, which is pending. But the big Korean firms don’t
seem phased by the prospect of international competi-
tion. ‘There’s reason for the major firms in Korea to be
confident they will continue to prosper. The big firms in
Seoul have a history, a strong client base, and experi-
ence and other resources of a longstanding practice. On
top of this, the big firms have been working by interna-
tional standards, international expectations, for a long
time. The big UK and US firms may start with a large
client base. But we don’t plan to cede any competitive
edge when it comes to the quality of our services, our
resources,’ concludes Yong Suk Oh. O
