Japan’s economic woes, with the country having slipped back into recession, are not preventing its companies from pursuing M&A – domestic problems may even be prompting firms to look further afield for growth opportunities.
Whether inside or outside their own sector, Japan continues to be a major source of outbound investment in global M&A – as companies seek to strengthen their positions outside a country with an aging population and minimal growth. In 2015, outbound deal volume from Japan rose 15% to 297 deals, while deal value spiked 67% to US$88 billion.
“We’ve got both the tier two and three companies that are now looking to bulk up by making overseas investments,” says Graeme Preston, Japan head of corporate at Herbert Smith Freehills in Tokyo. “We’ve also got the tier one Japanese companies – the likes of Dentsu, Softbank and Suntory – which continue to do the really large billion-dollar deals in the US or Europe, and also look for possibly smaller, more speculative deals in emerging markets everywhere.”
The financial services sector alone amounted to US$32.6 billion in outbound investments, including Tokio Marine Holdings US$7.5 billion acquisition of UK-based HCC Insurance Holdings.