Opinion: Masahito Tachikawa

There is a clear trend emerging in the Japanese M&A market which shows that companies are looking beyond the borders of the country for acquisitions.

Recent data suggest the emergence of a potentially significant boom in cross-border M&A. In the month of May cross-border M&A involving a Japanese buyer reached 40% of the total number of deals for the month. More recently in the period from June 1 to June 21, cross-border deals again comprised 40% of all deals for the period, but on a value basis, cross-border transactions represented 92% of the total transaction value for the period.

This is the highest level since the first cross-border M&A boom in 1987-1992. This potential second cross-border M&A boom is different from the first in that while real estate-related deals financed by bank loans were prominent in the first boom, Japanese corporates are now targeting strategic M&A in areas such as services, distribution channels, healthcare and consumer sectors backed by internal funds accumulated from strong operating cash flows and recent lower levels of capital expenditures. With Japanese domestic markets shrinking due to a declining population, Japanese companies are seeking growth overseas through M&A.

While still at an early stage, we believe this trend will gather momentum and could last for the next 3 to 5 years.

MASAHITO TACHIKAWA IS CEO OF IBS SECURITIES, THE JAPANESE MEMBER OF CATALYST'S INTERNATIONAL PARTNERSHIP MERGERS ALLIANCE. HE CAN BE CONTACTED EITHER DIRECTLY AT IBS ON THE E-MAIL ABOVE OR VIA THE BUSINESS MANAGER OF MERGERS ALLIANCE, STAS MICHAEL ON +44 207 881 2990.