Japanese companies shopping abroad for takeovers are running up a record bill so far this year, as they pounce on opportunities to grab market share presented by falls in global stock prices. Once considered slow and likely to overpay, the Japanese are becoming more savvy, though the jury is still out on how well they manage their acquisitions.
In the latest cases, drug maker Shionogi & Co. Ltd. said Monday it is buying Atlanta-based Sciele Pharma Inc. for $1.1 billion in cash, while London-based Change Capital Partners agreed to sell luxury fashion house Jil Sander to Onward Holdings Co. of Japan for 167 million euros ($245 million).
In the past week, Japan has overtaken China as this year's biggest buyer of foreign firms in the Asian-Pacific region.
The trend seems to be gathering momentum as many Japanese firms fear losing key clients and falling behind their peers because they don't have a global network. On top of that, shareholder activists are increasing pressure on managers to put their companies' huge cash piles to work.
'M&A is starting to achieve critical mass. As the biggest Japanese firms build market share in the U.S., their suppliers feel the need to follow them,' said Kenneth Siegel, managing partner at Morrison & Foerster LLP in Tokyo. The law firm is helping a supplier of Toyota Motor Corp. expand in the U.S. through mergers and acquisitions.
Japanese acquisitions of foreign companies total $43.3 billion year-to-date, a record for the period and nearly twice that for all of 2007, according to financial data researchers at Thomson Reuters. U.S. companies are their targets of choice, with Indian companies a distant second.
In the late 1980s, when their balance sheets were bloated by inflated stock and real-estate prices, Japanese companies snapped up U.S. firms en masse. After the bubbles popped, many of the buyers ran into difficulty and some were nearly bankrupted by their splurge.
The Japanese piled back into the U.S. at the zenith of the technology bubble around the turn of the millennium; one of the biggest deals was NTT DoCoMo Inc.'s purchase of a stake in AT&T Wireless in January 2001 for $9.8 billion. But NTT DoCoMo, Japan's largest cellphone service operator, subsequently had to heavily write down the investment.
Japanese companies are also picking their acquisitions more carefully than in the past, when they bought trophy assets such as New York's Rockefeller Center and California's Pebble Beach golf course. Earlier this year, Daiichi Sankyo Co., a major Japanese pharmaceutical company, unveiled plans to buy a majority stake in India's biggest drug maker by sales, Ranbaxy Laboratories Ltd., for as much as $4.6 billion, giving Daiichi a foothold in the fast-growing generic-drug market and extending its global reach.
Although still not as fast on executing a deal as many U.S. companies, the Japanese are speeding up. Takeda Pharmaceutical Co., which paid $8.8 billion to acquire U.S. biotech firm Millennium Pharmaceuticals Inc. in April, needed just 14 days to get to a merger agreement from a pact to negotiate exclusively with the American company.
In the past, Japanese companies shied away from competing in auctions and for listed firms, preferring to make exclusive arrangements with private companies and paying in cash. After about 15 years of paying down debt, Japanese companies still tend to pay cash, but recently they have also been winning auctions for public companies -- a sign they are becoming more familiar with Western M&A techniques.
Copier and printer maker Ricoh Co. announced the acquisition of Pennsylvania-based office-equipment distributor Ikon Office Solutions last week for $1.62 billion, after a competitive auction. The deal puts Ricoh's much larger rival Canon Inc. under pressure to follow suit, analysts say.
However, many Japanese companies have developed headaches the morning after the deal. A key problem has been lack of clarity on who is responsible for the acquired business. The issue has been compounded by the Japanese culture's emphasis on consensus decision-making, meaning the country has few executives with strong leadership qualities to take firm control of large Western firms. Matsushita Electric Industrial Co. had a tense, combative relationship with the management of Hollywood movie studio MCA Inc. and eventually sold its 80% stake in 1995.
But Japanese companies are learning and are making an effort to keep the incumbent team happy and motivated. Takeda paid many of Millennium Pharmaceuticals' 1,000 employees retention bonuses to stay on for at least 12 months. That came on top of the cash that employees could get by exercising their stock options.
'This makes the initial investment more expensive, but it's something that will definitely pay off,' Takeda President Yasuchika Hasegawa said in an interview after the takeover.
In Shionogi's acquisition of Sciele Pharma, the Sciele management team will remain in place.
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ļװУձҩShionogi & Co.һʾƻ11ԪֽչܲλSciele Pharma Inc.⣬ܲλ׶صChange Capital Partnersͬ1.67ŷԪ2.45ԪʱƷJil Sander۸ձOnward Holdings Co.
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ձ˾ԼܻΪûȫʧȥҪͻھֺ֣չͷƺǿ⣬ɶȨҲҵʩѹҪ󽫹˾޴ֽ𴢱á
ʦMorrison & Foerster LLPפϻǶ(Kenneth Siegel)ʾʼּȺЧӦձҵ׷гݶǵĹӦҲӦ׷ͻںչЭ(Toyota Motor Corp.)һҹӦͨչг
ɭ·͸(Thomson Reuters)Ĳݣձҵĺչܹģﵽ433Ԫʷ֮ͬȥȫձ˾УҵͷŽĿ꣬ӡȹ˾ڴϯ
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ڴɽ׵ٶԱȲ˾ձ˾ⷽѾߡ4·ݣTakeda Pharmaceutical Co.Ͷ88ԪչƼ˾Millennium Pharmaceuticals Inc.ֻ14ʱ˴̸ͬеɺϲЭȫ̡
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ӡʹӡ(Ricoh Co.)ͨ16.2ԪչܲλڱϦݵİ칫豸Ikon Office SolutionsʦǱʾ׽ģϴľּ(Canon Inc.)ѹʹòЧ¡
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ձ˾ҲڲܽߣȡʩչҵŶӵʿ͸ɾTakedaMillennium Pharmaceuticals1,000Աеְ֧𣬻ȡټڹ˾12¡⣬ЩԱʹƱȨֽܻ
TakedaܲYasuchika HasegawaڽɺܲɷʱʾȻӴ˳ͶʹģǱֵõͶʣ϶رġ
ShionogiչSciele PharmaScieleԭ㽫Ρ
