M&A Guide 2026: South Korea

The South Korean M&A market began a gradual recovery in the second half of 2024, gaining full momentum by 2025. According to TheBell, a total of 691 transactions closed in 2025, with an aggregate value of approximately KRW 90.7 trillion, representing an increase of approximately 83% compared with 2024 (KRW 49.6 trillion). This marks the highest annual deal value since 2021 (KRW 87.1 trillion).

The recovery was also notable in qualitative terms. Korean conglomerates pursued a series of high-profile outbound acquisitions, including Samsung Electronics’ acquisition of Germany’s FläktGroup, and SK Hynix’s acquisition of Intel’s NAND business. At the same time, large corporates continued to divest non-core business units to private equity (PE) funds and other financial sponsors, reflecting an ongoing portfolio optimisation trend.

Despite the market’s broader recovery, PE fund activity remained cautious overall. While dry powder was abundant, market participants observed a shortage of attractive, publicly marketed deal opportunities. Adding to the restraint was the insolvency of Homeplus – acquired by MBK Partners in a leveraged buyout (LBO) – which entered court-supervised rehabilitation proceedings, fuelling calls for tighter PE regulation and heightening sensitivity to legal risk.

The public M&A arena also produced a landmark dispute. Beginning in September 2024, an MBK Partners–Youngpoong consortium launched a hostile tender offer for Korea Zinc, a non-ferrous metals company. Over the course of approximately four months, competing tender offers of an aggregate consideration of over KRW 4 trillion were made. This was the first time Korea saw genuinely contested multiple tender offers, and became a landmark case implicating virtually every contentious issue in public M&A – from tender offer procedures and board defensive measures to the role of institutional investors.

Shareholder activism has also intensified, driven in part by the enhanced minority shareholder protections introduced through amendments to the Korean Commercial Code (KCC). In certain listed company acquisitions, activist shareholders have challenged the fairness of control premiums paid exclusively to controlling shareholders.

The convergence of recent tender offer disputes and growing shareholder activism is driving a structural shift in the Korean market, which has traditionally been dominated by private M&A. Hostile acquisitions of listed companies were historically uncommon, but the recent KCC amendments, combined with heightened interest in corporate governance and the growing influence of institutional investors, have stimulated active debate on tender offers, governance restructuring, and minority shareholder protection. These developments are significantly elevating the importance of legal risk management in listed company transactions.

In 2015, MBK Partners acquired Homeplus, a major hypermarket chain, for approximately KRW 7.2 trillion, completing what was then the largest LBO in Korean history. The company’s profitability deteriorated steadily, however, amid structural shifts in the retail sector – driven by the explosive growth of online commerce – and changing consumer behaviour following COVID. In March 2025, Homeplus filed for court-supervised rehabilitation proceedings (hoesaeng jeolcha, broadly comparable to Chapter 11 of the US Bankruptcy Code).

The failure raised pointed questions about whether the LBO had been excessively leveraged and whether sufficient efforts had been made to turn the business around (see, e.g., Kyunghyang Shinmun, March 16 2025), and became a catalyst for a broader policy review of the PE regulatory framework.

On December 22 2025, the Financial Services Commission (FSC) announced reforms to the institutional PE fund regime, introducing what it termed a “one-strike-out” policy under which a single material violation of law that undermines sound market order would be sufficient grounds to revoke a general partner’s registration. The announcement signalled a clear regulatory intent to subject Korean PE sponsors to heightened scrutiny.

A notable point of contention, however, is that offshore PE sponsors fall outside the scope of this regulatory regime, raising questions of regulatory parity. Until the regulatory landscape stabilises, domestic Korean PE sponsors are expected to maintain a cautious posture.

The most consequential regulatory development for the Korean M&A market in 2025 was a series of three amendments to the KCC. The current administration has made “capital market innovation for a Korea premium” a key policy priority, advancing reforms to expand directors’ fiduciary duties, mandate cancellation of treasury shares, and strengthen shareholder value. The three rounds of amendments introduced the following changes:

• First amendment – codification of directors’ duty of loyalty to shareholders (in addition to the company); establishment of a legal framework for electronic shareholders’ meetings; redesignation of “outside directors” (sahoe-isa) as “independent directors”, with an increase in the mandatory appointment ratio from one-quarter to one-third of board members; and strengthening of the voting cap on the largest shareholder in the appointment and removal of audit committee members (the ‘3% rule’).

• Second amendment – mandatory cumulative voting for large listed companies with total assets of KRW 2 trillion or more and separate election of audit committee members for companies with an audit committee.

• Third amendment – mandatory cancellation of treasury shares as a default rule.

The most significant of these changes is the expanded duty of loyalty. Under the prevailing interpretation prior to the amendments, directors owed fiduciary duties solely to “the company”. The amended KCC (Article 382-3) now provides that directors must:

• Faithfully discharge their duties for the benefit of shareholders as well as the company; and

• Protect the interests of shareholders as a whole and treat all shareholders equitably in the performance of their duties.

While the precise scope of these provisions will need to be defined through judicial precedent, it is now beyond dispute that in situations involving conflicts of interest between controlling and minority shareholders – such as mergers, squeeze-outs through the controlling shareholder’s appraisal right (maedo cheonggu-gwon), or capital reductions – directors must give equitable consideration to all shareholders, not solely to the controlling shareholder.

Foreign investors have long perceived that their interests as minority shareholders were insufficiently protected in Korean M&A transactions. The codified duty of loyalty, which expressly aims to protect minority shareholders, is broadly viewed as a positive signal for cross-border transactions, as it has the potential to enhance the reliability of minority investment structures.

An important caveat, however, is that in a straightforward share purchase transaction, the target company’s directors do not typically have authority to intervene in the transaction itself – and, by extension, the expanded duty of loyalty may not directly apply. This means that minority shareholders may still lack full protection in certain M&A structures. Where, however, the transaction involves a new share issuance or other corporate action by the target, directors’ duties will be engaged, and the analysis will need to be conducted on a transaction-by-transaction basis.

The Korea Zinc control contest offers a preview of how the expanded duty of loyalty may operate in practice. Although the dispute arose before the amended KCC took effect, it will serve as an important reference point in future debates over the permissible scope of board defensive measures in hostile acquisition scenarios.

These changes are expected to have a direct impact on board decision-making in public M&A contexts, including mergers, demergers, responses to tender offers, and governance restructuring of listed companies. Going forward, how to reflect the interests of all shareholders from the transaction structuring stage is likely to emerge as a critical issue.

Korean law – specifically, the KCC and the Financial Investment Services and Capital Markets Act (FSCMA) – does not impose a mandatory tender offer obligation. As a result, transaction structures that pay a control premium to the controlling shareholder without providing equivalent consideration to minority shareholders have been permissible.

In 2025, certain transactions brought this issue to the surface. EQT Partners’ acquisition of Douzone Bizon, an enterprise software company, and Affinity Equity Partners’ attempted acquisition of Lotte Rental – which was ultimately blocked by the Korea Fair Trade Commission (KFTC) – were the prominent examples. Both transactions were structured to pay a control premium for the controlling shareholder’s stake while leaving minority shares unacquired, and certain institutional shareholders raised fairness concerns on behalf of minority investors.

Against this backdrop, the introduction of a mandatory tender offer system has progressed to the legislative stage. Multiple bills amending the FSCMA to introduce such a system are pending in the National Assembly, and the FSC is working towards introducing a concrete framework in the first half of 2026.

Opinion is sharply divided. Proponents argue that a mandatory tender offer is essential to protect minority shareholders and address the long-standing ‘Korea discount’. Opponents counter that such a regime would make listed company M&A effectively unworkable, ultimately reducing the market’s capacity to absorb deal flow and harming the broader transaction ecosystem.

In this context, EQT launched a voluntary tender offer for the remaining shares of Douzone Bizon in February 2026 at a price that included a full control premium. This was widely interpreted as a pre-emptive move in anticipation of the forthcoming mandatory tender offer legislation.

National security screening of foreign acquisitions of Korean companies is primarily governed by the Foreign Investment Promotion Act (FIPA) and the Act on Prevention of Divulgence and Protection of Industrial Technology (the Industrial Technology Protection Act, or ITPA). In August 2024, implementing regulations under the FIPA were amended (new Article 5-2) to allow the relevant authorities to initiate a national security review ex officio, even in the absence of a formal foreign investment filing. Amendments to the ITPA in the same period substantially increased penalties for the leakage of designated national core technologies and expanded the scope of prior approval requirements for cross-border M&A transactions.

Enforcement activity remains limited in practice. Over the three-year period from 2023 to 2025, only five cases are reported to have been subject to preliminary review by the Foreign Investment National Security Review Expert Committee, a figure that stands in contrast to a more than 10% increase in inbound foreign direct investment over the same period.

From a practical standpoint, cross-border transactions involving companies that hold designated national core technologies – particularly in the semiconductor and battery sectors – must factor in prior approval under the ITPA as a process that runs in parallel with merger control review by the KFTC. Deal teams should build in a lead time of several months ahead of closing from the structuring stage. The regulatory trajectory points towards further tightening: bills currently introduced by legislators from both ruling and opposition parties would codify the national security review in statute, extending its reach to minority stake acquisitions and indirect investments.

The Korean M&A market in 2025 saw both quantitative recovery – in terms of deal volume – and a qualitative transformation driven by structural changes in the regulatory environment. These trends are expected to carry through into 2026.

Heading into 2026, the expansion of directors’ fiduciary duties through the KCC amendments, the active debate over mandatory tender offers, and the strengthening of national security investment screening collectively demand that domestic and foreign deal participants adopt new approaches to legal risk management from the earliest stages of transaction design. While these developments introduce near-term uncertainty, the institutional foundations being laid are expected to enhance the transparency and predictability of the Korean market over the medium to long term, ultimately strengthening market confidence.

On the capital supply side, the National Growth Fund is expected to deploy approximately KRW 150 trillion over five years, with initial allocations targeting advanced sectors including AI, semiconductors, and bio-healthcare – likely catalysing M&A activity in these areas. The ongoing trend of conglomerate portfolio rebalancing and non-core asset disposals is also expected to continue generating deal flow.