Japan Tobacco gives Reynolds breath of fresh air 29 Sep 2015 The buyer is paying $5 bln for the overseas rights to the U.S. cigarette group’s American Spirit brand - a whopping 250 times earnings. It’ll allow Reynolds to exhale a cloud of debt as it focuses on U.S. sales. Its strategy is a handy guide for similarly challenged sectors.
Japan’s new growth target worth taking seriously 25 Sep 2015 Prime Minister Shinzo Abe has pledged to expand the economy by more than a fifth. That looks fanciful with prices falling once again. A credible objective would need central bank support and better-defined tools. Even so, targeting nominal economic activity has merit.
Japan Post’s mega-IPO had better be priced to go 22 Sep 2015 The landmark privatisation is Japan’s biggest listing in decades. Floating the postal operator, plus stakes in its banking and insurance arms, could raise $11.5 bln. But growth is low and follow-on share sales loom. Successful delivery requires low valuations and high dividends.
SoftBank’s stock market discount is here to stay 15 Sep 2015 Investors value Masayoshi Son’s tech conglomerate at around 36 percent less than the sum of its parts. Following Alibaba’s IPO, most of SoftBank’s worth is in shares of companies listed elsewhere. It’s hard to see what its billionaire founder and CEO can do to close the gap.
Japan index: Bonus bounty lifts sluggish economy 9 Sep 2015 The Breakingviews Abenomics index perked up in July, as summer bonus payments boosted wages. But a muted recovery in consumption, weak manufacturing and slumping housing starts point to anaemic demand both at home and overseas. Expect calls for fiscal stimulus to grow louder.
Mitsui Sumitomo assumes a lot with Amlin swoop 8 Sep 2015 The Japanese insurer is paying 3.5 billion stg for the second-biggest insurer in London’s Lloyd’s market. Paying a big premium for already well-valued overseas assets is becoming a national trend in Japan. Mitsui will need punchy synergies to hit its target’s cost of capital.
Streamlining could help Toshiba regain lost value 7 Sep 2015 The scandal-hit Japanese electronics group reported a $318 mln net loss for 2014, and restated years of results. Reliable numbers and revamped corporate governance are a start in regaining investors’ trust. Shedding troublesome units like PCs would be a useful next step.
Deepening economic ties belie China-Japan tension 3 Sep 2015 Seventy years after World War Two, relations between Asia’s two biggest economies are in poor shape – as Beijing’s huge military parade shows. But trade, investment and tourism tell a different story. Japan’s economic success increasingly depends on China’s, and vice versa.
Suzuki can clear capital roadblock with VW buyback 31 Aug 2015 The Japanese carmaker has skimped on dividends and amassed a huge cash pile during its long feud with 19.9 pct owner VW. Now the German group must sell and Suzuki wants to buy the $3.8 bln stake. That would mean a big boost to earnings - and hearten Suzuki’s hedge fund fan club.
With strong new backer, Olam gets what Noble needs 28 Aug 2015 Mitsubishi is backing a Singapore-listed trader bashed by short-sellers, paying $1.1 bln at a big premium. Noble needs such a vote of confidence. But the Japanese group is actually endorsing Olam – a firm supported by Temasek that has been spared the worst of the commodity rout.
SoftBank’s hired gun takes high road to ownership 20 Aug 2015 Nikesh Arora will invest $483 million in the Japanese tech group, cementing his place as successor to founder Masayoshi Son. It’s a refreshing change from the complex awards handed out by many U.S. companies. It should also help the ex-Googler push through more bold investments.
Kirin pins M&A comeback hopes on risky Myanmar 20 Aug 2015 The Japanese drinks-to-pharma group is buying 55 pct of the country’s top brewer for $560 mln. It’s a welcome change from a sluggish home market. But beer’s last frontier comes with risks. Kirin is teaming up with a military-linked partner at a time of political uncertainty.
Japan GDP drop shows limits of cheap yen 17 Aug 2015 The annualized 1.6 pct drop in second-quarter output will put pressure on the Bank of Japan to print more money. But instead of lifting inflation and wages, monetary easing may only depreciate the yen. With a weak currency losing its power to stimulate, the gains may be limited.
Japan index: Wage slump raises fear of weak output 14 Aug 2015 The Breakingviews Abenomics index fell to its lowest level in three months in June, stoking concerns that GDP may have shrunk in the second quarter. Delayed summer bonuses may have temporarily squeezed pay, while stalling inflation and sagging consumption suggest a grim outlook.
Edward Hadas: Nikkei joins demographic denial cult 29 Jul 2015 Nikkei is the latest Japanese company to look for growth outside the shrinking domestic market. Its Financial Times purchase may work out, but the approach is flawed. Few companies can profitably escape their demographic destiny. It may be better to accept steady decline.
Rob Cox: FT is to Nikkei as Jim Beam is to Suntory 24 Jul 2015 Outside Japan, the $1.3 bln purchase of the salmon-hued newspaper is hard to fathom. The finances may never stack up. From a Japanese perspective, the calculus is different. In a shrinking market, without a product that travels internationally, deals like this are existential.
Financial logic in $1.3 bln FT buy is paper thin 23 Jul 2015 Japanese media group Nikkei is taking a bold step with its purchase of the Financial Times. The price equates to 35 times adjusted operating income. Sure, Nikkei gets a bucketload of kudos. But the tag is around three times higher than the multiple enjoyed by quoted media peers.
Toshiba crisis tightens the screws on Japan Inc 21 Jul 2015 A probe found $1.2 bln of phantom profits at the electronics giant. Corporate reforms mean firms in Japan are already under huge pressure to show they are better-run and more profitable. Now they will have to work even harder to prove that overhauls are not just cosmetic.
Toshiba crisis offers chance for sweeping overhaul 15 Jul 2015 An accounting scandal is set to force out the CEO of the Japanese firm. Its new leader will have an opportunity to bolster governance, auditing, and financial flexibility. After that, the question must be: do toll booths, nuclear plants and laptops really belong together?
Japan index: Steady climb masks uphill struggle 10 Jul 2015 The Breakingviews Abenomics Index rose for a third straight month in May, led by a tentative recovery in private spending. But wages aren’t yet growing fast enough for consumers to shake off the chilling effect of last year’s sales tax increase. Deflation is dormant, not dead.