In the middle of a worldwide credit crisis, Japanese companies are using their large cash reserves to go shopping beyond their borders.
So far this year, they have taken part in mergers and acquisitions worth ¥4.56 trillion (US$42 billion), a 180 percent increase over the same period last year, the Japanese financial daily Nikkei Shimbun reported yesterday.
While US and European firms are struggling with the consequences of the credit crisis that was triggered by the mortgage industry in the US but has spread broadly, their Japanese competitors have abundant stocks of funds.
In the face of the rapidly aging Japanese society and its falling birth rate, companies in the world’ s second-largest economy are increasingly seeking new growth opportunities abroad.
From year to year, Japanese firms are obtaining a greater proportion of their turnover beyond the country’s borders. The foreign portion of the total turnover of the Japanese production industry rose to a record 45 percent in the financial year that ended on March 31, Nikkei reported.
Some of the largest purchases of firms this year involved Japanese pharmaceutical companies, which are increasingly focusing on the rapidly growing foreign markets.
Takeda Pharmaceutical bought its US competitor Millennium Pharmaceuticals for some ¥900 billion. Daiichi Sankyo was reportedly seeking to buy the Indian firm Ranbaxy Laboratories for up to ¥500 billion.
The newspaper said that in late March, Japanese firms listed in the stock exchange had cash reserves of over ¥60 trillion.
Given that they have a small volume of debt, Japanese firms are in a relatively good financial situation by comparison to their international competitors.
At the same time, because of favorable exchange-rate movements, foreign firms listed on stock exchanges around the world have become a more accessible goal for Japanese companies, Nikkei quoted an economist as saying.
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