Japanese overseas mergers and acquisitions (M&A) may surge this year as companies expand abroad to counter a stagnant domestic economy and try to cut the cost of climate change rules, Recof Corp said.
Hikari Imai, chief executive officer of the Tokyo-based M&A advisory firm, forecasts takeover and investment deals by Japanese companies abroad to increase by almost 30 percent to more than ¥3.6 trillion (US$39 billion) after a 62 percent decline last year, he said in an interview at his office yesterday
Declining local demand as Japan’s population ages and shrinks is prompting manufacturers to invest in countries such as China and India to survive, Imai, 60, said. Global climate-protection rules requiring businesses to cut greenhouse-gas emissions mean higher costs for companies, encouraging mergers to reduce the financial burden and stay competitive.
“There may be a 1 trillion yen cross-border deal sealed this year,” said Imai, a former vice chairman of Merrill Lynch Japan Securities, which advised Japan Tobacco Inc on its £7.5 billion (US$12.2 billion) acquisition of UK-based Gallaher Group Plc in 2007.
Imai said he expects food and beverage, energy and chemical companies to be involved in cross-border takeovers and investment this year. Trading houses may also seek access to overseas natural resources, he said. Japan imports 95 percent of its energy needs.
Overseas acquisitions by Japanese companies totaled ¥2.8 trillion last year excluding debt, the lowest in four years, according to data compiled by Recof. Corporate purchases overseas amounted to ¥2.64 trillion last year, according to data compiled by Bloomberg.
Recof ranked 65th in handling mergers in Japan last year, Bloomberg data shows.
The company advised on the merger of Shonai Bank Ltd and Hokuto Bank Ltd, two regional Japanese lenders, last year, Imai said. Nomura Holdings Inc was the No. 1 adviser, with a 34 percent market share.
The shift in Japan to cleaner energy prompted Nippon Oil Corp to merge with Nippon Mining Holdings Inc into the country’s largest oil-refiner, to cut operational costs and be competitive. The merger is expected to be completed in April.
Kirin Holdings Co, Japan’s biggest brewer by sales, led Japanese companies taking advantage of a stronger yen to buy overseas assets last year.
The company spent about US$4.6 billion to take full control of Sydney-based Lion Nathan Ltd and acquire almost half of San Miguel Brewery Inc in the Philippines.
“We expect a growing trend for Japanese companies, particularly manufacturers in mature industries, to make cross-border M&A deals aiming at expanding their overseas business,” said Keiichi Sugiura, director of Japan Buy-out Research Institute Corp in Tokyo.
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