TOKYO, Japan — Outbound mergers and acquisitions in Japan increased to over six times the level seen during the pandemic’s low point in the second quarter. According to data from M&A consultancy Recof, Japan Inc. completed 182 agreements in April-June, up 56% over the same time last year, with a total value of 2.16 trillion yen ($19 billion). The increase in deal-making reflects Japan’s desire for growth, especially as the country’s population continues to decline, and the expedited vaccine deployment has boosted economic optimism. Prior to the coronavirus outbreak, corporate Japan had been on a global M&A frenzy as more corporations looked to diversify their businesses and invest abroad. The total number of international purchases reached an all-time high of 826 in 2019. Many corporations cut down on investments after the epidemic hit, citing fears about the global economy and supply chain disruptions. Instead of boosting investments, many businesses prioritized protecting their personnel and preserving cash. However, as vaccine implementation increases in certain nations and global superpowers such as the United States and China show signs of economic recovery, Japan’s appetite for cross-border M&A is gradually returning. Even when compared to the January-March period, overseas acquisitions increased in the second quarter. Deal volume jumped by 29% over the first quarter, while total value increased by 9%. The total deal value for the first half of 2021 has already surpassed 4.1 trillion yen, matching the total deal value for the entire year of 2020, which was 4.4 trillion yen. “The momentum for overseas acquisitions is starting to pick up, with more companies accessing our platform in the last two to three months,” BIZIT, which operates an online investment matching platform under global M&A consultant GCA Corp., said. Hitachi has made the largest acquisition so far this year. Lumada, the electrical equipment company’s primary Internet of Things platform, is poised to be acquired for $9.6 billion by GlobalLogic, a U.S. software developer. Panasonic, another Japanese electronics manufacturer, plans to complete its $7.1 billion acquisition of Blue Yonder, a U.S. provider of supply chain management systems — its largest acquisition in a decade. “The majority of the acquisitions that are going through are Japanese corporations buying software producers or IT-related firms,” said Keishi Sakakibara, cross-border deal manager at Nihon M&A Center, Japan’s largest independent M&A firm. “Travel limitations make it difficult for firms to tour international plants,” he says, pointing out that software developers are easier to buy than manufacturers. “Japanese corporations are cautious to buy without visiting the seller’s plants and activities,” he noted. SoftBank Group, a tech investment behemoth, has raised roughly $3 billion by purchasing a 40% share in AutoStore, a Norwegian robotics company that specialized in warehouse automation technologies. As the epidemic boosts online purchasing, they’re working together to exploit the expansion in the logistics business. Smaller agreements in Asia are still increasing in quantity, despite the fact that the largest mergers were primarily Japanese corporations acquiring Western enterprises. According to BIZIT, there has been a lot of interest in buying businesses in Singapore and Vietnam. Due to the installation of strong virus control measures, both countries have exhibited economic resiliency. As countries resume business travel and inoculation speeds up, Sakakibara of the Nihon M&A Center expects agreements to pick up. Japan plans to have all of its citizens vaccinated by October or November. “As vaccinations advance, I believe the cross-border M&A market will have a favorable outlook beginning next year.” Meanwhile, according to BIZIT, there have been some issues with closing deals. “While sellers want the purchase to close at the best price possible, COVID earnings impacts are making it difficult for buyers and sellers to agree on a price,” it said, causing some deals to be postponed./n
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