'No time to waste': Japan Inc set to step up outbound M&A
By Makiko Yamazaki, Scott Murdoch and Kane Wu
TOKYO/SYDNEY/HONG KONG (Reuters) -Japan Inc's pursuit of overseas deals is set to accelerate as the country's corporate giants come under pressure to boost capital efficiency and the central bank moves towards ditching policies that depressed the currency.
A growing number of Bank of Japan policymakers are warming to the idea of rising interest rates when they meet March 18-19, and while rate increases are widely expected to be incremental, the change would boost the yen and deal prospects, bankers and lawyers said.
A stronger yen, which has gained about 1% against the dollar so far this month, would make overseas targets cheaper for potential acquirers in Japan, from sectors ranging from financials to technology.
«An increase in interest rates in Japan may be positive for the yen… and make it easier for Japanese companies that are currently more domestically focused to do outbound deals,» said Natsuko Ogawa, a Melbourne-based Ashurst partner.
For those companies with significant global operations, any change in Japanese interest rates would likely have «limited impact» on their ability to finance those transactions, said Ogawa, who specialises in Japanese cross-border deals.
Nearly $17 billion worth of overseas acquisitions by Japanese companies have been announced this year, according to LSEG, in the strongest start to a year for outbound activity since 2019.
The momentum this year comes on the back of an 81% jump in outbound deal value last year to $58 billion, as companies looked to tap alternate revenue streams to soften the impact of a deflationary domestic economy.
Japan's outbound M&A boom set a sharp contrast with activities in the rest of the Asia Pacific region,
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