| NEW YORK/TOKYO
NEW YORK/TOKYO Dec 20 Japan's companies spent a
record amount in 2012 to acquire assets outside of their
economically moribund country, up 24 percent from the previous
year, as a strong yen turned foreign companies with a strong
growth potential into bargains.
Investment bankers say 2012, which saw the largest foreign
purchase on record by a Japanese company, may have marked a
fundamental shift in corporate Japan's attitude to foreign
mergers and acquisitions that could spell even more deals ahead.
"There's been a marked change in approach by the large
Japanese (corporation), who now realize the need to diversify,"
said Gregg Lemkau, head of M&A for Europe and Asia at Goldman
Sachs. "They seem to have woken up in a way that has made them
much more competitive in cross-border M&A situations."
Softbank Corp's audacious $20.1 billion takeover of
70 percent of U.S.-based Sprint Nextel Corp, which has yet
to be finalized, was the largest ever acquisition by a Japanese
company of a foreign target.
All in all, Japanese companies spent nearly $84 billion in
outbound M&A in 2012 in over 655 deals, up from $68 billion in
2011, according to Thomson Reuters data.
Other major deals included Dentsu's $5 billion
acquisition of UK-based media firm Aegis Group PLC and Marubeni
Corp's $3.6 billion purchase of U.S. grain company
Gavilon Group LLC.
"The two big themes are going to be more big strategic
deals, and more cross-border flow," said Christopher Lawrence,
New York based deputy chairman of Global Investment Banking at
Japan's gross domestic product during the third quarter
contracted 0.9 percent and the economy minister, Tatsushi
Shikano, said the country has fallen into a recession. Japan's
population is also shrinking and aging, with two out of every
five people 65 or older.
Combined with the impact of a currency that has appreciated
rapidly since 2007 and cash-rich corporate balance sheets that
have lightened their debt load since the 1990s, many Japanese
companies are now looking abroad for growth.
Although the yen has taken a hit since last week's election,
bankers don't expect this to impact deal flow significantly.
"I expect Japanese companies to continue seeking overseas
assets despite the recent yen weakness," said Kensaku Bessho,
managing director and head of the M&A advisory group at
Mitsubishi UFJ Morgan Stanley Securities Co Ltd. "They know they
need to maximize growth opportunities outside Japan because of
fundamental problems in their home country, namely the shrinking
population and anemic economic growth."
Nearly 75 percent of the cross-border acquisitions by
Japanese companies this year have been made in the United
"Japanese buyers view the U.S. as a large, stable market at
a time when Japan's economy is slowing and the outlook for
Europe remains uncertain," said Jonathan Rouner, head of
international M&A at Nomura Securities.
Prior to the Sprint deal, the largest deal of this kind was
Japan Tobacco's $15 billion acquisition of UK-based
Gallagher Group in 2007, followed by Takeda Pharmaceutical's
purchase of Switzerland's Nycomed SCA for $13.6 billion