Japanese firms step up overseas M&A

Number of deals hits record in first half as smaller companies get into the game

With SoftBank CEO Masayoshi Son taking the lead, Japanese companies have been engaging in mergers and acquisitions at record levels.

Japanese corporations made 339 overseas mergers and acquisitions during the first half of the current Japanese fiscal year, the highest number of deals in the April-September period since records began in 1985.

The number of deals was up 14% from a year earlier, according to Recof, a Tokyo-based M&A consultancy which calculated the estimate from publicly available documents and interviews.

However the total value of the deals declined more than 20% to 4.2 trillion yen ($37.2 billion), although the comparable period last year saw megadeals by SoftBank Group and others, which inflated the figure.

The average price of each overseas deal fell 40% from a year earlier to 24.4 billion yen, as Japanese businesses took on more midsize targets. There were 45 midsized deals valued between 10 billion yen and 100 billion yen, a 25% increase from a year earlier.   

That trend was driven by the activity of companies that traditionally rely on internal demand but are now seeking access to overseas sales channels. For example, staffing group Persol Holdings announced in July a 69.1 billion yen buyout of Australian recruiter Programmed Maintenance Services, while Tokyo Century is spending 67 billion yen to acquire 20% of U.S. aircraft leaser Aviation Capital Group in a deal that could close in December.

"There are more [Japanese] midsize companies that are forming a list of potential acquisition targets, and independently collecting information from overseas funds and other sources," said Koichi Tamura, executive officer at Deloitte Tohmatsu Financial Advisory.