The series of mergers and takeovers announced on Thursday among the top business groups, known locally as chaebol, were aimed at reducing chronic overcapacity, creating management efficiencies, slashing debt and bolstering foreign confidence. That's the theory, anyway.

"So two second-rate companies with too much debt and too much capacity are merged, and we get a bigger second-rate company with too much debt and too much capacity. What's been solved?" said Stephen Marvin head of research at Jardine Fleming Securities.

"Why go through a tremendously complicated problem of trying to merge two distinct management cultures? Why not take one behind the house and shoot it in the back of the head?" he asked.

A merger between LG Semicon and Hyundai Electronics's semiconductor division, and Hyundai Oil's takeoverof Hanwha Energy, took the spotlight. Other deals have Hyundai Petrochemical merging with Samsung General Chemical.

Details on financing, stakeholding and management control were sketchy at best. The Federation of Korean Industries (FKI), the chaebol business association which announced the deals, said they were still being negotiated.

"The first problem chaebols are expected to encounter is who gets the management control of a merged firm," said Lee Han-koo, president of Daewoo Economic Research Institute. "No chaebol wants to let it go," he said. Big deals are a new concept to the patriachs of the family-run conglomerates or chaebols.

For years, the largest chaebol competed to match each other in sheer size, regardless of economic logic. The result was some of the biggest, but least profitable, business groups in Asia, as they invested in industries suffering from global over supply and weak prices.

"Chaebols have been deadly rivals. Corporate cultures are vastly different and I see that as apotential problem in terms of management," said managing director of IRC Ltd Peter Bartholomew, a Seoul business development firm.

The FKI boasted the deals would lop off 20 trillion won ($15 billion) in overlapping investments over the next five years, attract up to $10 billion in foreign investment by 1999 and maintain employment at current levels, or even create jobs.

But layoffs would be inevitable, analysts said. "Layoffs are unavoidable in these type of mergers," said Lee of Daewoo. "We should expect resistance from labour groups."

The hardline Korean Confederation of Trade Unions on Friday balked at the possibility of major layoffs. "The indiscriminate layoffs as a result of big deals would lead to fresh conflict between management and employees and create social instability," a union statement said.

Analysts also cast doubts on the chaebols' commitment to reforms. "I think it's too much of a central government driven economy approach. They are certainly not market economy, capitalistprinciples, management decisions," said IRC's Bartholomew.

President Kim Dae-jung has been pushing for months to get the top five business groups to tie up the big deals, in line with South Korea's pledge to the International Monetary Fund to restructure the economy as part of a $58.35 billion rescue package.

Analysts said the chaebols' demands for debt concessions in exchange for the deals were excessive.