Japanese M&A volumes boosted by Vodafone

A new report offers mixed signals.

A new report by Thomson Financial offers mixed signals as to whether the Japansese M&A market has finally taken off.

Triggered by Vodafone’s recent acquisitions in the Japanese telecom sector, the total volume of cross-border M&A activities into Japan has increased significantly over the first half of the year. Total cross-border M&A volume in the first half was $10.87 billion, compared to $7.57 billion in the same period last year. However, the number of cross-border transactions announced in this period is down to 75 from 103 transactions last year.

The Vodafone effect means that the biggest investors in Japan are UK-based companies. With 10 transactions valued at $8.76 billion, these UK investors top the chart by holding almost 81% of the M&A market share for the period, while US investors and German companies trail some way behind.

Under the lead of UK-based Vodafone, the telecommunications sector dominated the total Japanese M&A volume with 14 transactions announced, accounting for 36.2% of the entire M&A volume. Vodafone’s recent stake in Japan Telecom and its subsidiary J-Phone Communications, is the largest M&A transaction in the Japanese market so far this year.

The UK-based company will acquire a 20% shares from rival, British Telecommunications. This followed its initial purchase of 10% in Japan Telecom last December, and the purchase of 15% from AT&T. The three transactions had a total value of $5.49 billion, and means Vodafone will control 45% of Japan Telecom and 46% of J-Phone Communications.

FIG, on the other hand, continues to be strong despite the significant drop of M&A activity in the banking sector. American International Group has expressed interest in buying the bankrupt Chiyoda Mutual Life Insurance, which just sold off $1.39 billion of individual loan assets to an undisclosed party.