In a study published by FinanceAsia magazine this week, we have ranked the best and worst M&A since the financial crisis based on creation and destruction of shareholder value.
This study was undertaken over the Summer and concluded that the best merger that has occurred since the Asian financial crisis was the merger between Kookmin Bank and H&CB to create Korea's premier bank. It topped the FinanceAsia list with a return of 218.4%.
Other successful Korean M&A included Hyundai Motor's acquisition of a controlling stake in Kia, which saw a return of 75.7%, which also finished in the top 10.
The merger of Kookmin and H&CB was unquestionably the best M&A we have seen in Asia since the Asian financial crisis. It followed all the basic principles of good M&A. It merged two good entities, was correctly priced and saw swift and decisive integration. In sum, it has created one of the finest banks in Asia, and its rising stock price has been an apt reflection of that.
In comparison, FinanceAsia magazine's study shows that the worst performing deals have been cross-border ones (which has led to overpaying by acquirors). The deal ranked bottom was also (not coincidentally) an example of attrocious corporate governance (Malaysia's UEM acquiring 32.6% of its parent, Renong).
The second worst performer was PCCW's acquisition of Hongkong Telecom, which saw a negative return of 52.2%, according to our methodology. As the accompanying article in the magazine is quick to point out, this does not necessarily mean it was a bad deal for controlling shareholder, Richard Li (just everyone else).
On average, Korean deals performed very well in our study, and by sector, bank deals did best overall. The study's starting point was the 2290 M&A deals launched in Asia since July 1997.
To obtain a copy of the magazine that contains this unique study, contact Naveet Singh on 852 21225224 or [email protected]