Japanese companies did more M&A in the U.S. than anywhere else, and that's up 23 percent over last year. Now, they're diversifying their purchases. Fred Katayama reports.
They're not the headline grabbers of the '80s like Mitsubishi Estate's acquisition of Rockefeller Center, but Japan money is back. And more of it is heading for the U.S. Facing an aging and shrinking population, companies are scrambling overseas for growth. Japanese companies did more M&A in the U.S. than anywhere else -- some 87 companies this year, up 23 percent from last year and more than double that of the same period in 2004. In just the last seven months, Japanese insurers paid $5 to $7.5 billion each to snap up HCC Insurance, Protective Life, and StanCorp Financial. And drug maker Otsuka completed its purchase of Avanir Pharmaceuticals. Attorney Michael Braun heads the Japan Practice Group at Morrison Foerster. "In the first half of this year, 20 deals have come across my desk, and we're working on three or four of them actively, which is busy enough. Five years ago, I'd probably be working on five deals also but out of ten possibilities." Acquisition targets have widened. While the market value share of tech deals has shrunk by half since 2004, basic materials deals have risen and could rise more. "This year, I've seen growth in the number of Japanese companies interested in more mundane industries such as homebuilding materials, paint, steel pipes, construction, machinery." Many Japanese companies overpaid for trophy properties in the 1980s. But M&A experts say they've gotten wiser now. They've become more strategic and less spendthrift in their purchases.