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from Breakingviews:

Tokyo Electron takeover is no template for Japan

By Una Galani
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Foreign acquirers have long-struggled to make headway in Japan. That makes Applied Material’s recent takeover of Tokyo Electron an interesting case study. The U.S. tech firm wooed its smaller rival with an all-stock merger and the promise of shared governance. However, the model may not work so easily elsewhere.

Most of the governance sweeteners Applied Materials offered are easy to replicate. Though Tokyo Electron shareholders will own barely a third of the combined company, Applied Materials handed over the chairman’s role, agreed to move its chief executive to Tokyo, and promised equal representation on the board for both sides. The real clincher, though, was the all-stock offer. The structure allowed Tokyo Electron’s management to present the transaction as a merger of equals rather than a change of control.

Cross-border all-share deals are tricky because shareholders of the target company are often reluctant to hold shares in a foreign company. As a result, the shares flow back to the acquiring country, often depressing the price. Even though the combined Applied Materials/Tokyo Electron will be listed in the United States and Japan, it is unlikely to be eligible for inclusion in Japan’s main stock indices. As a result, funds that passively track those indices will be forced to sell.
However, Tokyo Electron has an advantage not shared by many Japanese companies: half its shares are already held by foreign investors, limiting any sell-off before the deal closes next year. The flow back could amount to around $2 billion, estimates one banker close to the deal, or 20 percent of the Japanese firm’s current market value. To help matters, the new company has pledged to spend $3 billion on a share buyback program.

from Breakingviews:

Dan Loeb‘s breakup plan deserves Sony’s ear

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Dan Loeb is taking Japan’s economic renaissance at face value: the hedge fund manager wants Sony to spin off its entertainment arm. Though activists rarely prevail in Japan, Loeb’s idea may have merits. The electronics giant should take him seriously.

from Breakingviews:

Weak yen makes Japanese electronics firms giddy

By Peter Thal Larsen

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

Japan's assault on the yen has produced some clear winners: investors in the country's beaten-up consumer electronics industry. Shares in Panasonic jumped 17 percent on Feb. 4 after the group reported a less-severe-than-expected quarterly loss. The hope is that stronger exports and recent cost-cutting will transform earnings. But with revenue still shrinking, the recent rally is largely based on hope.

from Breakingviews:

Samsung investors should worry less about Apple

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By Wayne Arnold

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Samsung investors are worrying too much about Apple. The company’s shares have slid on concern the iPhone’s maker might be buying Japanese memory chips to cut its dependence for parts on its South Korean rival. But Apple’s diversification only reflects how smartphone demand is outpacing parts supply. Apple still needs Samsung and Samsung’s valuation has fallen too far.

from Breakingviews:

Samsung moves on from Japan to nibble at Apple

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By Wayne Arnold

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The Japanese may have pioneered the model of a vertically integrated electronics manufacturer, but Samsung looks to have perfected it. The Korean company started by pulling apart Japanese TV sets, then reverse-engineered the manufacturers’ business model. By avoiding their missteps, it’s driving them out of TVs and carving up the smartphone market with Apple. Now, as more business is coming from emerging markets, Apple needs to watch out for Samsung’s still-growing appetite.

from Breakingviews:

Taiwanese money can’t save Japan from Samsung

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By Wayne Arnold

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Taiwanese money can’t save Sharp from Korea’s Samsung. Foxconn’s $1.6 billion investment buys Japan’s electronics company time. The deal gives Sharp cash and the promise of wider sales too, but does nothing to reduce a global glut in flat-panel screens. Like Sony, Panasonic and Toshiba, Sharp has for too long insisted on fighting for cutthroat markets where it’s no longer competitive. As Hitachi has shown, withdrawal may be the best option.

from Breakingviews:

Japan Inc’s earnings problems are home grown

By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Something is amiss with Japan’s biggest names. Sony, Panasonic and Honda were three whose earnings were battered in the latest quarter, but they weren’t alone. Earnings at the 493 Japanese companies that announced results as of Oct. 31 were 57 percent short of their forecasts, according to Deutsche Bank. Excuses abound, from earthquakes to weak U.S. demand. But it’s problems at home that make them so susceptible.

from Breakingviews:

Kindle going places, but rivals fast behind

Amazon's bid to offer its wireless electronic book reader in 100 countries gives it an early lead in the race to dominate the market.

Yet while the move could boost the Kindle's share of the emerging eBook business to upward of 70 percent, Amazon faces growing competition, plunging prices and increasingly restive book and newspaper publishers.

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