Korea’s cross-border tech M&A weaker than rivals

By Shin Ji-hye
  • Published : Jun 4, 2018 - 18:25
  • Updated : Jun 4, 2018 - 18:26

While the global cross-border mergers and acquisitions market is heating up, Korean companies are still behind in buying and selling promising tech startups on the global stage and are focused on local deals, according to a nonprofit trade organization on Monday. 

According to a report released by the Korea International Trade Association, the nation’s total number of cross-border M&As stood at 31 during the period between 2013 and 2017. It accounts for 15 percent of the total 197 deals.

The number is smaller than the US, whose cross-border deals were 822 of the total 2,583 deals during the same period. It is also smaller than the European Union with 639 cross-border deals out of 1,406 deals, China’s 84 of 394 deals and Japan’s 68 of 319 deals.

In terms of M&As in “deep tech,” which refers to next-generation technologies, including the internet of things, big data, artificial intelligence, blockchain and robots, only two deals were cross-border in Korea during the period, KITA said.

“Tech M&As in Korea have been steadily on the rise, but its cross-border deals are relatively passive compared to the US, the EU, China and Japan,” said Kim Bo-kyung, a researcher at KITA’s trade strategy division.

This means Korean companies are not active in buying foreign companies with promising technologies and global companies are not also interested in buying related Korean firms, she added.

KITA said Korea needs to establish a virtuous cycle to foster promising global tech startups as they are sources of technology, manpower, market, data and network in the fast-changing environment.

The nation’s largest tech firm, Samsung Electronics, has stood out the most in tech M&A deals, according to the KITA.

“Samsung used to have a vertical business structure to develop and produce everything from parts to finished products on its own. But it is now breaking from the structure and actively pushing for mergers and acquisitions in the global market,” the report said.

The tech giant set up the Global Innovation Center in Silicon Valley to lead its investment and M&As. Under the center, Samsung acquired the US mobile payment system provider LoopPay and the US internet of things company SmartThings.

“Samsung’s move is seen as the firm’s efforts to improve its competitiveness in its software, which is relatively weaker than its hardware. It is now innovating to be a convergence firm through successful M&As,” Kim said.

Naver, the nation’s largest search engine, is also pushing for tech M&As with the aim of integrating it with its own technologies, according to the KITA. It has established a foundation to grow into an AI-powered tech firm by acquiring the Xerox Research Center Europe in France.

By Shin Ji-hye (