A Surge of Trillion-Won Mega Deals: Will the M&A Market Awaken?

TaylorMade Valued at Over 4 Trillion Won, Preferred Bidder Selected
M&C Solution Sale Accelerates as Lock-Up Expires
SK Microworks, Aekyoon Capital, and More Up for Sale

This year, the domestic mergers and acquisitions (M&A) market is expected to see a surge of large-scale deals, with sale prices exceeding 1 trillion won. As deals that have officially entered the sales process begin to emerge one by one, attention is focused on whether the long-dormant M&A market can finally regain momentum.

According to the investment banking (IB) industry on January 20, the deal most likely to be closed first this year is TaylorMade. Centroid Investment Partners, a private equity fund (PEF) management firm, plans to conduct a data room due diligence for Old Tom Capital, the preferred bidder, disclosing key information such as performance.

The entire 100% stake in TaylorMade is up for sale, and Old Tom Capital is reported to have offered nearly 4.4 trillion won, the highest bid in the main auction. F&F holds the right of first refusal to acquire TaylorMade under the same terms. If the preferred bidder is officially selected, F&F must express its intention to acquire within two weeks. The market is watching closely to see whether F&F will acquire TaylorMade at a price in the mid-4 trillion won range.

The sale of M&C Solution is also set to accelerate this year. This follows the expiration of the lock-up on December 15 last year for the 73.78% stake in M&C Solution held by the Socius-Well to Sea Investment consortium. In addition, the company's market capitalization, which temporarily soared above 2 trillion won due to the defense stocks boom, has recently settled at around 1.5 trillion won, which is another factor that could speed up the sale process.

Taking into account the management premium, the 73.78% stake held by the Socius-Well to Sea Investment consortium is estimated to be worth around 1.5 trillion won. Major companies in the defense sector, such as Hanwha, LIG, and Poongsan, are being mentioned as potential buyers. The industry is also paying attention to whether Taekwang Group, which returned to the M&A market after 17 years, will participate.

In addition, a number of other deals are waiting in the wings. Hahn & Company, which owns SK Microworks Solutions, has selected UBS and a domestic accounting firm as sale advisors and is seeking both domestic and international buyers. Global SEAH Group has put up its paper businesses, including Taelim Packaging and Jeonju Paper, for sale as a package. EQT Partners, the largest shareholder of Aekyoon Capital, has appointed UBS and Citi Global Markets Securities as sale advisors and is proceeding with the sale process. All of these are large-scale deals, each valued at over 1 trillion won.

There are also assets that have been unable to find buyers for several years. MBK Partners is pursuing a resale of Lotte Card, but the outlook for a successful sale this year remains uncertain. MBK Partners attempted to sell Lotte Card for 3 trillion won in 2022, but the deal fell through. In 2024, they lowered the asking price to 2 trillion won and resumed the sale process.

However, a series of recent setbacks are expected to make the sale difficult again this year. Last year, a large-scale customer data breach occurred due to hacking, and currently, financial authorities are considering sanctions against MBK Partners, such as suspension of business, due to the Homeplus incident. Under the Financial Company Governance Act, if a controlling shareholder receives a disciplinary action of "institutional warning" or higher, or if criminal punishment of the controlling shareholder becomes likely during the biennial eligibility review, the shareholder may lose its qualification. As a result, MBK Partners could lose its status as the largest shareholder of Lotte Card. Currently, MBK holds about a 60% stake in Lotte Card through a special purpose company (SPC).

Meanwhile, industry opinions are divided on whether the M&A market will be revitalized this year. Some believe that the government’s National Growth Fund, which will invest 150 trillion won over five years, will serve as a catalyst for the M&A market, while others point out that persistent external uncertainties will remain an obstacle.

An executive at a private equity fund commented, "The National Growth Fund may not be used directly for buyouts (acquisition of management rights), but the signal that liquidity will be injected into the market is important in itself. Institutional investors (LPs) who previously had no plans to invest may open their wallets in response to government policy. Compared to previous years, the M&A market has recently become more active."

It was also noted as a concern that MBK Partners, a major player in the PEF industry, has been unable to participate actively in the M&A market due to crises such as the Homeplus incident. In addition, the Homeplus incident has highlighted the significant social repercussions of failed B2C (business-to-consumer) investments and the strengthening of related regulations, leading to a clear aversion to B2C companies, which is another obstacle to revitalizing the M&A market.

A PEF industry insider explained, "Last year, a significant number of trillion-won deals ultimately failed to close, and MBK Partners was cited as a key potential buyer in all of them. For large-scale deals worth trillions of won, major players need to step up, but large corporations are still facing liquidity issues and are only interested in areas such as artificial intelligence (AI). While the M&A market itself may become more active, whether 'big deals' will actually be completed is another matter."