Japanese firms embark on 'buying spree'

26 August 2008

Many Japanese companies are stepping up their overseas acquisitions, taking advantage of their comparatively high capital ratios.

New data compiled by Bloomberg shows that the overall value of these buys has risen by 91 per cent so far this year, when compared to 2007.

By way of comparison, credit crunch-hit UK and US firms have made fewer acquisitions over this period.

Last year, total foreign purchases stood at $25.4 billion for Japanese firms.

So far in 2008, this figure has already reached $48.6 billion, with big deals including the $8.8 billion paid by Takeda Pharmaceutical for US-based Millennium Pharmaceuticals.

For analysts, the situation is slightly reminiscent of the 1980s spending spree from Japanese companies, which saw the firms snap up US assets including the Pebble Beach golf links in California for what seemed to be very inflated prices.

Speaking to the news agency, Scott McGlashan at J O Hambro commented: "Pebble Beach and those kinds of trophy assets, it's clear those were crazy deals, but now they're buying things that are earnings enhancing and using cash that's been generating no income to do it."

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