Japan is growing ripe for increased M&As as companies are flush with cash and the takeover activity is lower than it should be, reports the Japan Times, citing a report released by the Goldman Sachs Group Inc.
Goldman urges Japanese companies to consolidate in industries where there is tough competition, and be more aggressive in making acquisitions in Asia, where the long-term growth potential is high. "Increased M&A activity is likely to be positive for Japan as a whole since it can lead to higher growth potential and result in economies of scale to enable Japanese firms to compete more effectively in global markets," says Kathy Matsui, chief strategist for Goldman in Japan.
Companies likely to be involved in M&A activity include those with high internal rates of return, companies that have at least $2 billion in cash and subsidiaries that may be acquired by their parent, the report said.
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