Surge in foreign bids for Japanese firms only just beginning, says BofA’s Komori

By Miho Uranaka

TOKYO (Reuters) – A surge in foreign takeover bids for Japanese firms is likely to accelerate, with a focus on those undergoing significant change in management, said Bank of America’s co-head of Japan investment banking, Yuta Komori.

The acquisition binge has coincided with increasing appetite for growth among Japanese companies and declining resistance to partnering foreign firms, Komori said in a Sept. 3 interview about market trends, not BofA’s business strategy.

WHY IT’S IMPORTANT

The increasing number of takeover bids reflects regulatory effort to improve corporate governance, including new guidance on how executives should respond to bids. It also reflects the rising appeal of Japanese firms kindled by a weak yen and the unwinding of cross-shareholding arrangements.

KEY QUOTES

Bidding “activity is becoming more active regardless of sector. It’s only going to increase from here.”

“Just as there are options to bolster one’s business domestically or to go overseas and strengthen it, there are naturally options to improve corporate value by partnering with foreign companies.”

“The Japanese capital market is the most dynamic market in the world right now.”

CONTEXT

Canada’s Alimentation Couche-Tard on Aug. 19 said it had approached 7-Eleven convenience store operator Seven & i about a potential takeover, in what would be the largest-ever foreign buyout of a Japanese company.

Other large bids of late include Blackstone (NYSE:BX)’s offer to take private digital comic distributor Infocom and Carlyle’s acquisition of KFC Holdings Japan.

BY THE NUMBERS

Foreign acquisitions of Japanese companies doubled to 902.2 billion yen ($6.20 billion) in the first half of the year compared with the same period last year, LSEG data showed.

($1 = 145.4200 yen)