Taekwang Group's aggressive mergers and acquisitions (M&A) strategy is under scrutiny. Despite pursuing large-scale M&A deals this year to diversify its business, both the acquired companies and Taekwang Industries, the group's core subsidiary, continue to struggle with losses. The recent failure to acquire K Shipbuilding has raised concerns about the need to enhance profitability and investment efficiency over mere expansion.
According to industry sources, Taekwang Group has achieved significant growth through large-scale M&A since last year. From last year to the first half of this year, the group has acquired Aekyung Industrial, the Courtyard Marriott Hotel in Seoul's Namdaemun, and Dong Sung Pharmaceutical, increasing its total assets from 8.7 trillion won in 2025 to 11.56 trillion won this year, a 33% rise.
As a result, Taekwang's ranking in the business sector has jumped from 59th to 48th, and the number of its subsidiaries has grown from 20 to 38. This marks the largest growth in size among the conglomerates designated by the Fair Trade Commission this year.
However, this expansion has not translated into improved profitability. Aekyung Industrial has seen its operating profit margin decline from 9.3% in 2023 to 6.9% in 2024, and further down to 3.2% last year, due to a slowdown in the cosmetics market and weak consumer demand. Dong Sung Pharmaceutical has also faced ongoing losses since 2018, necessitating urgent restructuring.
Taekwang Industries, the M&A leader, has reported poor performance as well. The company recorded an operating loss of 35.4 billion won last year and continued this trend with a 11.4 billion won loss in the first quarter of this year. Analysts predict that the company will also face losses in the second quarter due to a delayed recovery in the petrochemical sector.
Market observers believe the success of Taekwang Group's M&A strategy hinges on securing future investment resources. If the performance of the acquired companies does not improve, additional costs for restructuring will be unavoidable. Notably, Taekwang Industries has expressed interest in reattempting the acquisition of K Shipbuilding if it becomes available again, making the need for stable investment capacity essential.
Previously, Taekwang Industries sought to acquire K Shipbuilding but failed to finalize the deal due to issues related to the consortium structure and refund guarantees.
Taekwang Industries plans to utilize its treasury shares to continue pursuing additional M&A and new business investments. However, the second-largest shareholder, Truston Asset Management, has strongly opposed this plan, citing concerns over shareholder value, leaving the feasibility of these plans uncertain.
One industry insider noted, "While size can be increased in the short term, profitability ultimately requires time. The profitability of existing investments like Aekyung Industrial and Dong Sung Pharmaceutical must be demonstrated first to gain market support for future acquisitions or additional investments, such as K Shipbuilding."
* This article has been translated by AI.
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