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Kakao adds 13 new affiliates in Q2, the most among major conglomerates: FTC

The exterior of the Korea Fair Trade Commission in the central administrative city of Sejong. (Yonhap)
The exterior of the Korea Fair Trade Commission in the central administrative city of Sejong. (Yonhap)

South Korean conglomerates have added 41 new companies under their wings in the second quarter of this year, in their forage for new business territories and business restructuring, the state antitrust watchdog said Tuesday.

Kakao Group, along with Sinorkor Merchant Marine, has bought in the most number of new companies at 13, as it aggressively pursued mergers and acquisitions on its path to become the country’s fifth-largest business group in terms of market capitalization in June.

According to Fair Trade Commission, the number of companies affiliated with, or owned by, 71 conglomerates, or classified by the commission as the “large business groups,” has increased from 2,612 at the end of April to 2,653, on July 31.

In South Korea, the FTC-designated large business groups or companies with assets worth 5 trillion won ($4.45 billion) or more, are subject to special corporate disclosure rules and antitrust regulations.

Kakao Group, which runs the country’s No. 1 mobile messenger app KakaoTalk and a leading search engine Daum, welcomed five game developers, three software providers and two publishers as its affiliates among others, and also an independent record label, Antenna, according to the data released by FTC.

The growth of affiliates under SinoKor Merchant Marine Group was more of a one-off affair following its acquisition of Heung-A Shipping Co. in June which has 12 units.

SK Group followed in the list, acquiring 11 new affiliates, including two companies specializing in music and video productions, two real estate-related companies, and a data firm on logistics.

On the other hand, SM Group, owning enterprises in construction, manufacturing and shipping sectors, and MDM, a property developer, disconnected with 5 affiliates, each.

During the April-June period, 106 firms have been incorporated into the 31 large business groups, while 61 affiliates have either been merged to a sibling firm, or divested from the conglomerate, the FTC said.

Over the acquisition movements of conglomerates, the antitrust watchdog explained that industry giants are taking actions to expand into new business arenas, to get ahead in the market.

For example, Hanwha Group and Hyosung Group, each established new companies, Enterprise Blockchain and Galaxia Metaverse, respectively, to tap into the blockchain industry, while SK acquired Real Estate Big Data Company and Thebiz, both of which run real estate data businesses.

Some conglomerates were seen to restructure their businesses with poor performance, amid the ongoing COVID-19 pandemic.

Hanwha Group split up the business unit in charge of food and beverage at Hanwha Hotels & Resorts to establish a new company The Tastable, while SK Group divested all of its shares of SKC Eco-solutions and SK TNS.

“Many corporate groups took actions to restructure their business units showing low performances amid the pandemic, and to forage for new engines for future growth,” a FTC official said.

By Jo He-rim (