Kirin Holdings Co.’s purchase of a stake in Brazil’s second-largest beer maker took Japan’s overseas acquisitions this year to at least $46 billion as the stronger yen boosts companies’ buying power abroad.
This year has been the busiest in terms of cross-border purchases involving Japanese companies since 2008, according to data compiled by Bloomberg. The total announced or completed since Jan. 1 almost equals that for similar deals in 2010 and 2009 combined.
Takeda Pharmaceutical Co. and Toshiba Corp. are among companies making acquisitions abroad, as the yen climbs against the dollar, having strengthened to a postwar record of ¥76.25 in March.
Kirin on Tuesday made its third-biggest purchase to gain a foothold in Latin America’s biggest beer market as a declining and aging population hurts domestic demand.
“Now is the only chance to take advantage of the strong yen,” Makoto Kikuchi, chief executive officer at Myojo Asset Management Japan Co., a Tokyo-based hedge fund advisory firm, said Tuesday. “Japanese companies, especially for companies that rely more on domestic demand, must go outside if they want to boost profits, as little growth is expected in their home market.”
Takeda’s announced plan to buy closely held Nycomed for €6.3 billion (¥690.27 billion) is the biggest deal this year, according to data compiled by Bloomberg. Nycomed will bring a remedy for smokers’ cough, and operations in China, India and Latin America to reduce Takeda’s reliance on sales in Japan and the U.S.
Sony Corp. and five bidding partners bought Nortel Networks Corp.’s remaining patents for $4.5 billion in a deal ended last month.
Trading company Itochu Corp. last month completed its purchase of the U.K. tire retailer Kwik-Fit Group Ltd. for £637 million (¥80.3 billion).
Japan Tobacco Inc. plans to boost overseas profit by at least 10 percent as it said domestic cigarette sales by volume have plunged since October, when the government boosted tobacco tax by a record 40 percent. The world’s third-largest publicly traded cigarette maker on July 29 agreed to pay $450 million for Haggar Cigarette & Tobacco Factory Ltd., which operates in Sudan and oil-rich South Sudan.
Japan Tobacco has gained 13 percent this year, compared with a 7.8 percent drop for the broader Topix index.
“The domestic market is saturated and has a little room to grow,” said Mitsuo Shimizu, an analyst at Cosmo Securities Co.
Kirin, Japan’s second-largest brewer, paid 3.95 billion reais ($2.5 billion) on Tuesday to gain a majority stake in Schincariol Participacoes e Representacoes SA, Brazil’s second-largest brewer and producer of Devassa Bem Loura and Nova Schin.
The maker of Kirin Lager, which also sells Tropicana Juice and Volvic mineral water, has spent more than $12 billion on overseas acquisitions in the past five years. Tuesday’s deal is Kirin’s biggest purchase after Lion Nathan and Australian milk and juice producer National Foods.
“Investing abroad is the most rational way for Japanese food companies to use their cash,” said Koichi Ogawa, portfolio manager at Daiwa SB Investments Ltd. “Beer demand is poised to grow in Brazil.”
Kirin bought all of Australia’s second-largest beer maker in 2009 and owns almost half of San Miguel Brewery Inc., which produces about 90 percent of the beer consumed in the Philippines. Japan’s beer sales fell 2.8 percent last year to 459 million cases, the lowest level since records began in 1992.
Asahi Group Holdings Ltd., Japan’s biggest beer maker by sales volume, agreed last month to buy Permanis, PepsiCo Inc.’s Malaysia bottler. The beer maker also offered 129 million New Zealand dollars ($112 million) for Charlie’s Group Ltd., a New Zealand-based fruit juice producer.
Asahi, which said in February it may spend ¥400 billion on acquisitions by 2012, plans to complete the a purchase worth 188 million Australian dollars ($203 million) of P&N Beverages Australia Pty.’s water and juice divisions in September.
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