A recent article for Reuters has highlighted the surge in Japanese companies’ global M&A deals. If the proposed deal for Softbank to purchase Sprint Nextel Corp for $20 Billion is completed, Japanese companies will set a record for outbound acquisitions this year ($75 billion). Japanese firms have announced 14 outbound transactions worth at least $2 Billion each, which totals 5 more than the previous year.
From an economic paper by Arikawa Yasuhiro and Miyajima Hideaki (link below), they describe the causes and parallels for a mature economy to undergo a surge in M&A activity. They conclude that industries with higher growth opportunity are likely to engage in more M&A activity, but that the same is also true for industries facing negative fundamental shocks like sales declines.
Is this aggressive growth an indicator that Japanese CEO’s are becoming more confident in the future of the Japanese economy or is it the result of less confidence in domestic growth potential?