The value of noncore operations and subsidiaries sold by listed Japanese companies in January-September exceeded ¥5 trillion, up some fivefold from a year before.
Companies moved to sell noncore operations to investment funds and others in order to focus their management resources on growth fields at a time when they are facing sudden changes in their business environments due to the new coronavirus crisis.
The number of businesses and operations sold by listed companies in January-September stood at 294, with the values of the deals totaling ¥5.1645 trillion, according to a survey by M&A consultancy Recof Corp.
The number grew 14.8 percent from a year before to hit the highest level in 11 years, Recof said.
In August, U.S. investment firm Blackstone Group agreed to buy the over-the-counter drug subsidiary of Takeda Pharmaceutical Co.
Atsuhiko Sakamoto, head of Blackstone’s Japan investment division, has said that although the subsidiary had a strong business foundation, its sales slumped due to the group’s flawed investment strategy.
“As a new shareholder, we’ll invest in people, goods and capital to realize growth,” he said.
With some ¥240 billion in proceeds from the sale of the drug subsidiary, Takeda will focus its management resources on its core operations, including cancer and digestive system disorder treatments.
Under the wing of Blackstone, the drug company will accelerate its expansion into China and Taiwan, sources familiar with the situation said.
Meanwhile, some companies have failed to make decisions promptly to sell noncore operations.
In October last year, Sanden Holdings Corp., which manufactures parts for air conditioning systems for vehicles, sold a subsidiary, Sanden Retail Systems Corp., to an investment fund for some ¥50 billion.
Sanden Holdings planned to improve its financial strength with the proceeds in order to boost investment in operations related to vehicle electrification.
But the company was later hit hard by the coronavirus crisis and began out-of-court rehabilitation procedures in late June. It is now working on business reconstruction with support from financial institutions while suspending debt repayments.
“It was unlucky for the company to face the difficulties caused by the coronavirus crisis, but it failed to make management judgments in a timely manner,” an investment fund source said.
By contrast, Sanden Retail Systems sees an opportunity for growth after coming under the wing of the investment fund and is considering going public in the future.
“Our decision-making has become faster drastically, and we now have more ways to utilize our profits,” Sanden Retail Systems President Masuya Mori said.
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