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Japanese corporates look abroad for growth

Japanese outbound M&A is reaching levels not seen since the 1980s as corporates seek to consolidate their newly strengthened positions. Chris Wright reports.

By Chris Wright

JAPANESE COMPANIES, EMBOLDENED by their new-found strength and stability, are looking overseas for assets. This is rejuvenating Japanese outbound M&A, a market that had been stagnant for a decade.

According to Dealogic, in the year up to August 11, 2006, 160 deals have been announced, worth in total $20.44 billion. That’s almost as much as the whole of 2004 ($7.29 billion) and 2005 ($15.92 billion) combined.

“The deals that have happened prove the theory that Japanese companies have come back to health, are better funded and are able to look at expansion, both domestically and overseas,” says Steven Thomas, co-head of M&A for Japan at UBS.

Many of the deals have been small but there have been several landmarks too. At the top of the list in scale is Toshiba’s $5.4 billion acquisition of Westinghouse Electric from British Nuclear Fuels, followed by the $4 billion sale of 80.17% of British glassmaker Pilkington to Nippon Sheet Glass. Six other deals worth more than $1 billion were announced in the course of the year to June 30, among them Daikin Industries’ purchase of Malaysian group OYL Industries from Hong Leong Secretarial Services, Osaka Gas buying American utility Fort Point Power from ArcLight Energy partners, and Marubeni’s purchase of deepwater oil and gas assets in the Gulf of Mexico from Pioneer Natural Resources.

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