Japanese investment set to continue in the UK

The UK remains an attractive area for investment by Japanese businesses, as demonstrated by the volume and value of transactions. Following a more difficult M&A market in the UK over 2009-2011, there were 45 transactions in the UK in 2012 involving Japanese investors, representing a value of c. £8bn. We believe that trend is set to continue throughout 2013.

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As demonstrated above, the UK is the most active market in Europe for inbound Japanese Deals. Although improving general economic conditions in the UK (and Europe) are making the region more attractive for Japanese investors, there are also factors in Japan which are driving outbound investment, as show below:

1. Corporate confidence following signs of growth in Japan as the government’s economic policies take effect. 2. A continued need for international experience to compete effectively in a competitive global market. 3. A lack of, or perceived lack of, higher growth opportunities in Japan. 4. Competitiveness of Japanese investors, due to a relatively low cost of capital.

M&A Deal highlights include:

  • Services (Dec-12) Hitachi Ltd. acquired the Railway Engineering Company Ltd for an undisclosed sum
  • Foods/Beverages (Feb-13) Japan-based food product wholesalers, Mizkan Group, acquired the pickles and sauces business of UK-based Foods manufacturer, Premier Foods plc
  • Advertising (Mar-13) Japan-based advertising agency, Dentsu Inc acquired UK-based marketing communications group, Aegis Group plc to expand their global presence
  • Foods/Beverages (Sept-13) Suntory Beverage & Food Ltd brought the Lucozade and Ribena drink brands from GlaxoSmithKline Plc as part of their global growth strategy.

Despite the weakening of the JPY in 2013 (as a result of the QE policy in Japan), we expect continued growth in inbound Japanese M&A activity. We will continue to update you on the latest activity from Japan and will be discussing key issues influencing investment in the coming months.

Find out more at PwC’s UK Japanese Business Network.

Isamu Funabiki | Corporate Finance Specialist
Profile | Email | +44 (0) 20 7583 5000

 

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