Executive Briefings

Cash-Rich Japanese Companies Buy Distressed Global Firms

The credit crunch has reduced merger and acquisition activity around the world. Banks have tightened their purse strings and the cheap credit that financed deals during the private-equity boom has dried up. This year the value of deals has fallen by 15 percent in America and 30 percent in Europe. But there is a bright spot amid the gloom: Japanese companies are on a spending spree, capitalizing on the distress to buy firms abroad. The number of foreign deals involving Japanese firms has increased only slightly compared with last year, but the value of transactions has more than doubled, reaching ¥6 trillion (around $57bn) so far this year, and on track to exceed 2006's record.
This wave of deals follows two previous forays overseas. In the late 1980s Japanese firms raced after foreign real estate, and in the late 1990s they piled into technology companies. Both binges ended badly, as companies sold their stakes at a loss and bolted for home. But things could be different this time.
Source: The Economist

The credit crunch has reduced merger and acquisition activity around the world. Banks have tightened their purse strings and the cheap credit that financed deals during the private-equity boom has dried up. This year the value of deals has fallen by 15 percent in America and 30 percent in Europe. But there is a bright spot amid the gloom: Japanese companies are on a spending spree, capitalizing on the distress to buy firms abroad. The number of foreign deals involving Japanese firms has increased only slightly compared with last year, but the value of transactions has more than doubled, reaching ¥6 trillion (around $57bn) so far this year, and on track to exceed 2006's record.
This wave of deals follows two previous forays overseas. In the late 1980s Japanese firms raced after foreign real estate, and in the late 1990s they piled into technology companies. Both binges ended badly, as companies sold their stakes at a loss and bolted for home. But things could be different this time.
Source: The Economist