Welcome to Crimson Phoenix’s news posts in 2024

It has been reported that M&A transactions involving Japanese companies in 2023 numbered 4,015, down by 6.7% in volume from 2022, the first decline in three years. It would appear that the increase in interest rates in major markets (excluding Japan) had reduced clarity on valuation and discouraged corporate investments. In contrast, the value of the deals increased by 52.2% over 2022 to some ¥17.9 trillion (US$124 billion), reflecting the announcement of large transactions, including the takeover of US Steel by Nippon Steel (which remains pending), acquisition of Toshiba by Japan Industrial Partners, the take-private of JSR by Japan Investment Corporation, etc.

Of the over 4,000 deals, domestic transactions saw an 85.1% increase in aggregate deal value, even though there were 8.2% fewer completions than in 2022. The biggest surprise rests in the 134.0% rise in the value of all Japan-outbound transactions on the back of 5.8% more deals in a year when the yen depreciated against the dollar by around 15%. This seems to validate our view that Japanese investors and acquirors place much more emphasis on long-term strategic value in purchasing overseas firms than on short-term currency losses (or gains). Disappointingly for us, Japan inbound M&A deals decreased by half in total value and by 15.3% in number, despite the yen weakness.

It is significant to note in this context a comment by Boonsithi Chokwatana, chairman of the Thai consumer product conglomerate Saha Group, who has been involved in doing business with Japan since the 1960s. He told the Nikkei that while most Japanese companies were capable of taking a long-term view in order to establish a relationship of trust with their overseas partners, their conventional decision-making processes involved too many steps and too much time, making them slow to react to changes in market conditions. This made them unsuited to competing in international business, where speed is of the essence.

Khun Boonsithi suggests that Japanese companies make much better use of younger staff in propelling growth, through the adoption of new ideas with the help of digital technologies which older employees would not be able to generate.

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