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Corporate mergers jump amid economic slump

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Published : 2012-11-04 20:06
Updated : 2012-11-04 20:06

Mergers among South Korea’s listed companies have surged this year as a growing number of firms tighten their belts to weather a protracted economic slump, the bourse operator said Sunday.

A total of 83 mergers were announced on the country’s main and secondary stock markets in the first 10 months of the year, up 51 percent from the same period a year earlier, according to the Korea Exchange.

The figure has already topped the 71 merger filings recorded in all of last year.

Reasons for mergers include the strengthening of managerial efficiency, cost reduction and the creation of synergy effects, but many firms seem to have decided to merge with others in desperate efforts to ride out the economic slump, analysts said.

“Companies appear to choose to merge with other firms in a proactive bid to tackle tougher business conditions as the global economy is mired in a prolonged slump,” said Choi Chang-gyu, a researcher at Woori Investment & Securities Co.

U.S. and other major economies are suffering from slow growth, while South Korea’s economic growth rate is feared to increase less than 3 percent, buffeted by sinking overseas demand for its products.

Market watchers expect corporate mergers in South Korea to expand further next year.

“The number of corporate mergers is expected to increase in the coming year as many firms are struggling to restructure their operations,” said Jang Hu-seok, an economist at Hyundai Research Institute. (Yonhap News)

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