Expect action in Japanese M&A

July 7, 2009

After falling off a cliff at the start of this year as the global financial crisis gripped, mergers and acquisitions by Japanese companies overseas are likely to pick up again in the second half of this year, according to boutique Japanese M&A advisory firm Recof Corp.

There won’t be a flood of deals, Recof President Hikari Imai says, but the ones there are, are likely to be chunky as Japanese companies expand their frontiers beyond domestic markets where growth prospects are limited.

Geographically the focus is likely to be Asia — China, India in particular and possibly the Philippines or Australia. And the types of companies looking abroad will broaden as well, Imai told the Reuters Japan Investment Summit.

Recof expects Japanese power utilities, paper, food and beverage and retailing firms to look abroad at markets where they can put their advanced technology and inventory control systems to use.

The sort of companies that up till now have been focused on their home base. Driving all of this will be expectations of lack of growth in Japan’s own markets as it climbs slowly out of recession and its population ages — and saturation domestically.

So Imai reckons yen strength and the big drop in stock markets everywhere mean it may be an opportune moment for companies with overseas ambitions.

 

Photo credit: REUTERS/Yuriko Nakao

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Many Japanese companies are rolling in cash as they were less exposed to toxic assets. Interesting to watch where they go shopping and what they shop for.