Japan wakes up to European M&A

The volume of outbound Japanese transactions has increased yearly by 20 per cent, with the past year posting record values, new research finds.


The volume of outbound Japanese transactions has increased yearly by 20 per cent, with the past year posting record values, new research finds.

The volume of outbound Japanese transactions has increased yearly by 20 per cent, with the past year posting record values, new research finds.
 
Analysis from corporate finance house DC Advisory Partners shows that if current performance continues the full year result for 2011 will be a 200 per cent increase in values compared with 2010.
 
Highlighting three primary deal drivers behind the increase of cross-border Japanese to European M&A, the report finds that factors such as the strong yen, a need to diversify and Japanese companies being cash rich.
 
Tosh Kojima, managing director and head of the Japan and Asia Focus Group at DC Advisory partners, comments: ‘A very tough European M&A market is starkly contrasted by the recent onslaught of Japanese buyers entering into Europe.
 
‘Japanese companies recognise that buying European technology and innovation enables them to gain a competitive advantage in the fast growing Asian economies.’
 
Research finds that so far in 2011 there have been more than 20 ‘significant’ Japanese acquisitions into Europe, typically within the €200 million to €1 billion range. Japanese companies are active in European companies with ‘ideas’ and that own intellectual property.
 
Kojima predicts there will be a ‘very busy’ Japanese market next year as cash-rich businesses look to European auctions because of a lack of attractive domestic targets.
 
He adds: ‘Already we have seen first-time buyers from Japan coming back for their second M&A target, it seems to fundamentally change their strategic mind-set.’
 
Looking further back, the report finds that the amount of Asian-originated investment that was committed to Europe through M&A activity has doubled in the past five years compared with the reverse route.
 
Kojima adds: ‘What is particularly exciting is that for both the mature Asian economies like Japan and the developing ones like China, M&A is no longer just the toll of a small number of global elites.
 
‘A broad layer of Japanese companies sitting below the well-known Japanese names have now woken up to embrace outbound global M&A for sound strategic purposes.’

Todd Cardy

Todd Cardy

Todd was Editor of GrowthBusiness.co.uk between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital. Connect with...

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