In 1990, at the height of the asset bubble in Tokyo, "Japan Inc." made 463 acquisitions of foreign firms. This year, the total is set to top 500 for the first time, with a record total spend of more than 7 trillion yen ($83 billion). IT giant Softbank’s $20 billion takeover of Sprint Nextel Corp., announced in October, will be the biggest foreign takeover ever undertaken by a Japanese company.
The acquisitions this time around are spread across a wide range of industries, rather than the trophy buys of prime real estate that unnerved America during the days of Japan’s roaring bubble economy.
“There was a slightly indiscriminate hue to Japanese buying in the late '80s, and companies have learned to be more sophisticated, rather than appearing to be carrying around large wads of cash in their back pockets,” says Yuuichiro Nakajima, head of Crimson Phoenix, a cross-border mergers and acquisitions advisory firm with offices in Tokyo and London.
Overlooking a key point
Japan’s financial institutions, their fingers burned badly by the bursting of the bubble that left them with massive, unrecoverable loans, survived the worldwide crash of 2008 relatively unscathed, having taken a more cautious approach than their Western counterparts. Indeed, it was Japanese investment bank Nomura that bought large chunks of Lehman’s European and Asian businesses after the bankruptcy of the US institution in 2008 that triggered the global financial crisis.