Japanese Firms Go on International Acquisitions Splurge

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Japan’s economy may be struggling, but one would hardly notice, given the behavior of some of its largest firms, which are slinging cash and gobbling up their corporate counterparts in a ravenous splurge suited for the biggest of boom times.

Nikkei Asian Review recently published a comprehensive rundown of these “ravenous” acquisitions—from Tokio Marine Holdings’ absorption of the American HCC Insurance firm to Canon’s purchasing of the major Swedish anticrime camera manufacturer Axis for 300 billion yen, an unprecedentedly huge acquisition for the Japanese company that catapulted it to the summit of its industry.

The Nikkei article also noted key Japanese acquisitions of major foreign industrial and logistics firms, including Japan Post’s purchase of the Australian firm Toll Holdings in May. It went on to quote a Reuters report that said the money poured into 2015’s 324 deals leapt by 60 percent over last year’s first six months to a combined 5.6 trillion yen ($45.3 billion), a record high spend for any six-month period.

And more major Japanese acquisitions may be on the horizon. Pensions & Investments Online cited sources that say Tokyo finance company Orix is vying for Seattle’s Russell Investments, while Mitsubishi UFJ Financial Group told the Financial Times that it is poised to spend as much as $8 billion on American and Asian acquisitions. Reuters reported similar details about Japan’s Aeon Co Ltd, citing anonymous sources who say the retail corporate giant is interested in buying the Malaysian branches of the British firm Tesco PLC.

So how does so much big spending occur in a period of economic downturn? The Nikkei article says such purchases shouldn’t be too big of a shock for financial observers because Japanese firms have managed to boost their performance, allotting them “ample financial reserves.”

But despite the new acquisition heights reached by Japan’s companies, the Financial Times warns those feats appear to be “baby steps” in comparison to the similar business moves made by Chinese counterparts, which appear to have “the bigger appetite” and which are being more assertive with their purchases. Japanese firms, in comparison, are instead opting for “incremental investments that can deliver a safe, steady yield than for transformational acquisitions.”

—Kyle Mullin

Image: Peter Dahlgren/Flickr, used under CC

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