Nomura’s report ‘In Japan’s growth strategies, M&As pose challenges beyond industry and size’

Nomura Securities published a report on the Japanese In-Out M&A trend, forcasting increase of it beyond industy and corporate size as one of core growth strategies. PMI (Post Merger Integration) becomes more and more important.

The followings areparts of the report summary:
Japanese companies are likely to step up overseas M&As
In FY13 H1, M&A deals involving Japanese companies were subdued, declining y-y in both value and number of deals, but there were signs of a recovery in Q2 in such areas as the announcement of major cross-border M&A deals. We expect overseas M&A activity by Japanese companies to pick up from FY13 H2 given the current M&A environment, including conditions in financial and capital markets and companies' financial positions as well as the government's growth strategies and support from regulatory reforms. Factors behind this outlook include (1) the need to secure competitive production bases, (2) the need to tap into growth markets and particularly domestic demand in emerging economies, (3) the pursuit of profit scale through global competiveness, and (4) the acquisition of resource interests by trading companies and material manufacturers. Against a long-term trend of yen appreciation, factor (1) has been the main reason for overseas advances by Japanese companies, but in recent years (2)–(4) have also become major incentives.

Performance of Japanese companies' overseas M&As as judged by equity markets
While the share price performance of Japanese companies after overseas M&As has not been especially weak on average, it deteriorated markedly in the wake of the 2008 financial crisis. It may also be that growth in the number of M&A deals served to undermine share price performance. Overseas M&A deals face high barriers to success. Not only is it vital to adapt to markets and technologies but also getting both management teams and employees on side is key too. At the same time, whether an overseas M&A is successful or not cannot be determined at an early stage and takes several years to evaluate. If an M&A comes close to what analysts would consider a successful case, it would likely raise expectations for a high probability of success and then be evaluated positively on the equity market.

You can download the report from

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.