In stark contrast to the downward global trend in cross-border mergers and acquisitions (M&A’s) in 2012, Japanese firms are expanding their investments overseas and the largest recipient by far is the United States. Japanese overseas M&A’s are on pace to double in value over the previous fiscal year with 28% of investments, by volume, directed to the United States, followed by India (12%), Germany (6%), UK (6%), China (6%), Indonesia (6%), Vietnam (5%) and Australia (5%), according to the report “A Resilient Japan-Outbound M&A after the Crisis” published by Deloitte.
A look at recent Japanese corporate investments here in the United States in 2012-2013 shows that acquisitions are no longer dominated by real estate, energy and mining, but are increasingly found across the consumer products and personal technologies sectors. Japanese M&A’s in the US shows are also more widespread in terms of industry sector and geography than in the past.
Recent Japanese firms’ mergers and acquisitions in the US include:
Japan is already the second largest source of foreign direct investment here in the United States at more than US$289 billion according to the most recent data from the U.S. Bureau of Economic Analysis. This is true despite the presence of faster growing economies in Asia. Some factors attracting Japanese companies to the U.S. specifically are: access to American free trade agreements, proximity to markets, proximity to raw materials and ease of logistics.
Among Japanese companies there is growing confidence in the US business sector and interest in innovating and competing within it. Not only do these mergers and acquisitions apply pressure to US companies to become more competitive, but they can also create new employment opportunities.
The largest recent Japanese corporate purchase, the Softbank acquisition of Kansas-based Sprint which began in October 2012, is a good example of Japanese companies investing aggressively to innovate US businesses. Speaking about his company’s US$20.1 billion purchase of 70% of Sprint, Softbank CEO Masayoshi Son said,
“When two rich firms rule the market like a duopoly, we see this as a real opportunity for a challenger.” Quote from October 16, 2012 press conference recorded in Wall Street Journal's "Bravado Behind Softbank's Sprint Deal".
Despite the inherent risk involved in tapping into a duopolistic market, Masayoshi Son is seeking to make Sprint the leading competitor in the US market while bringing competition, consumer choice and innovation to the U.S.