Japan’s corporate sector has spent the past few years selling businesses off to pay down debts and restructure but there is gathering evidence of the emergence of a more acquisitive bent.
A survey of M&A trends by Japanese broker Nomura Securities notes that the number of deals in 2005 increased 8.1% over 2004 to 2,308, the highest since 2002. Of particular interest is ‘in-out’ data, which show that Japanese companies are finally beginning to buy overseas again. According to Nomura, the number of in-out deals rose 16.4% year on year. The total value of all M&A transactions also hit an all-time high at ¥15 trillion ($131 billion).
The Nomura report says: “The 2005 data reiterated the trend seen in the past few years that Japanese companies are steadily shifting from the restructuring of their businesses to strengthening and expanding them. As the reluctance to use M&A that may have been seen in the past appears to be gradually easing, M&A activity in Japan should remain strong.”
David Baran, founder of Symphony Financial Partners in Tokyo, believes that Japan’s relatively isolated economy will start to integrate more closely with the rest of Asia. “We see the convergence of economies between Japan and Asia,” he says. “All this free cashflow has got to go somewhere and now Japanese companies have learned that maybe it’s better to buy than to build.”
A recent example of this trend in practice is Japanese firm Ajinomoto, which in January acquired the Amoy group from French group Danone for $238 million. Amoy makes soy sauce and other Chinese food products and is based in Hong Kong, Shenzhen and Shanghai.
