Global M&A

The global M&A market contracted for a period after the pandemic, driven by surging asset prices, rising interest rates, and heightened geopolitical risk, but strategic activity has recently begun to reappear.

Notably, major companies in Asian countries, including Japan and Korea, are pursuing aggressive global M&A in order to expand meaningfully into developed-market economies.

CASE 1. SoftBank's Acquisition of Ampere

Japan's SoftBank acquired Ampere Computing of the United States, a designer of Arm-based data center CPUs, for roughly 6.5 billion dollars, signaling a clear strategy to secure a strong position in the AI infrastructure market.

CASE 2. Meiji Yasuda Life's Acquisition of a U.S. Insurer

Seeking to move beyond Japan's aging population and low interest rate environment, Meiji Yasuda, one of Japan's four major life insurers, acquired the insurance business division of Legal & General of the United States for roughly 2.3 billion dollars.

The transaction is expected to serve as a notable example of diversifying an insurer's revenue portfolio and securing a stable revenue source in overseas markets.

CASE 3. Korean Healthcare Companies' Overseas M&A Moves

Domestic pharmaceutical, bio, and medical device companies such as Company S and Company R are likewise pursuing acquisitions of global companies to secure technological capabilities, broaden their lineup of FDA-approved products, and enter the U.S. and European medical markets.

Through these moves, they aim to strengthen their competitiveness in AI software and reinforce their position in the North American medical market.

Like a domestic corporate M&A, a global M&A generally moves through the following stages: advance preparation → bidding → due diligence → negotiation → closing of the acquisition → Post-Merger Integration.

Because the deal crosses borders, however, differences in language, systems, culture, and legal risk between the parties call for a more refined strategy.

Advance Preparation and Strategy Setting

• Clarifying the Purpose of the Acquisition: the goal, whether securing technology, entering a market, expanding the customer base, or strengthening a global brand, should be defined clearly
• Searching for the Target Company: identify potential targets and conduct a preliminary feasibility study with industry specialists and local advisers
• Designing the Acquisition Structure: select the most suitable structure, such as a stock acquisition, an asset acquisition, a merger, or a triangular merger
• Acquisition Financing Plan: prepare financing methods such as cash, share issuance, external borrowing, and joint acquisition, together with a foreign exchange risk hedging strategy

Letter of Intent (LOI) and Non-Disclosure Agreement (NDA)

A buyer generally submits an LOI that conveys genuine intent to the counterparty and enters into an NDA to secure access to information for due diligence.

1. Forward Merger VS Reverse Merger

• Forward Merger: the traditional merger structure in which the buyer becomes the surviving entity
• Reverse Merger: the target company becomes the surviving entity and the buyer ceases to exist
• can be advantageous for a backdoor listing or for preserving the continuity of the enterprise

2. Triangular Merger and Reverse Triangular Merger

• Forward Triangular Merger: the buyer's subsidiary absorbs the target company
• Reverse Triangular Merger: the subsidiary is absorbed into the target company, which survives
• the most commonly preferred structure in the United States, which can limit the liability of the acquiring company

3. Use of a SPAC (Special Purpose Acquisition Company)

• backdoor listings through SPACs are active in the United States
• the deadline for completing the business combination is 36 months, and if the merger fails, the listing does not proceed and the investment funds are returned

• Reform of the Legal System to Accommodate Various M&A Structures

Allowing various merger structures used at the U.S. level, such as reverse triangular mergers, share exchanges, and asset transfers, to be used domestically as well can broaden M&A options when expanding overseas

• Strengthening Government-Level Support

subsidies for overseas expansion by industry and reform of systems to mitigate foreign investment risk in emerging markets

simpler procedures for foreign exchange transaction reporting and overseas direct investment reporting

• Building a Local Legal and Tax Advisory Network

forming cooperative channels with law firms and accounting firms that focus on major regions (the United States, the EU, ASEAN, and the Middle East)

selecting a global partner that can provide everything from preliminary feasibility review to PMI strategy in a single package

A global M&A can serve as a strategic means of building competitiveness in the global market.

For a global M&A to be completed successfully by both parties, a multilayered strategy generally helps, covering transaction structure design, advance risk review, an understanding of local systems, and PMI strategy.

You are welcome to pursue corporate innovation through global M&A with the advice of the firm's attorneys and its affiliated certified public accountants and tax accountants.