Strong Yen Pushing Japanese Firms to Look into M&A Deals

Japan's manufacturers may take advantage of the yen's 30% gain against the dollar by acquiring European or U.S. companies that are in a weak position because of the financial crisis, reports Bloomberg.


“M&A will happen -- there is a need to switch to a more profitable business model taking advantage of the strong yen,” Takeshi Miyao, a Tokyo-based supply-chain analyst for auto consultant Carnorama, told Bloomberg. “There is a very real possibility for acquisitions of European or U.S. companies that are in a weak position because of the financial crisis.”


According to Bloomberg, the MSCI World Index of 1,657 companies has slumped 29% in the past two years, helping cash-rich buyers in search of bargains. Kirin Holdings Co. led purchases of overseas assets by Japanese companies in 2009 after spending $4.6 billion to take full control of Sydney-based Lion Nathan Ltd. and acquire almost half of San Miguel Brewery Inc. in the Philippines.


“Japanese companies may also ride the strong yen to advance in Asia,” Koji Hirai, chief executive officer of M&A advisory Kachitas Corp., told Bloomberg. “And it doesn’t just have to be acquisitions, they can hedge their risks through share purchases and joint ventures.”


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