M&A

What is a Japanese company anyway?

One of many jobs I did not get over the years was a board position for an investment trust focused on Japan. In the “any other questions for us?” bit at the end, I raised the issue of “how do you define a Japanese company? Is it enough just to say it is listed on the Tokyo Stock Exchange? Or headquartered in Japan?” In retrospect, a foolish question to ask at that point and the chair simply shut me down and said that was a topic for debate for another day. Which of course never happened. And a year or two after that interview, I had a certain amount of schadenfreude watching the fund’s Net Asset Value take a dive.

Is SoftBank?

What triggered that question was that the fund had made a lot of money over the years investing in SoftBank, which is listed on the Tokyo Stock Exchange and is headquartered in Japan, but to my mind, not really a Japanese company. This is not some racist point about the founder, Masayoshi Son, being ethnically Korean. More that, as an investor, rather than just simply thinking of your portfolio as a series of aggregated regional or national risks, with each regional or national economy moving in a particular direction and counterbalancing each other, in the case of Japanese companies, another risk to consider might be the particular way that traditional Japanese companies behave and whether the fund is investing in those traditional Japanese companies, or emerging ones.

Nissan – run by a Mexican, using Chinese batteries, manufactured in the UK for sale to the US?

Even some of those traditional Japanese companies are no longer owned by Japanese shareholders. I was reminded of this by the recent coverage in the UK of the British government contributing a substantial part of the £1bn funding for an AESC electric vehicle battery factory to be built in Sunderland, to supply Nissan. AESC is described as “Japan-owned” but actually the controlling majority of shares is owned by Envision, a Shanghai based company. AESC’s headquarters are in Japan, however, and Nissan still owns some shares in it.

That this news came a day after the announcement of a UK-US trade deal which will (if signed) dramatically reduce tariffs on UK cars being exported to the USA does not seem a coincidence – even though some commentators say this scanty deal was rushed through so as to be announced in time for the 80th anniversary VE day.

Another announcement the UK government might have wanted to synchronise with was the leaked news that that the new, Mexican CEO of Nissan will announce tomorrow (13th May) plans to cut 20,000 jobs worldwide. Looking at the capacity utilisation and sales data for Nissan, Japan, the USA and China look likely to bear the brunt of this. Production has already ended in Argentina and India. Nissan will also announce that it is not going ahead with building a battery factory in Japan. So, using the Sunderland plant and the AESC factory for batteries for the new Leaf, and exporting to the USA looks like a plausible plan now and one that the UK government is presumably also happy to back.

Other Nissan suppliers, traditionally Japanese, are also now foreign owned, depending on how you classify this. Marelli (which used to be Calsonic Kansei in the UK) and Vantec (a logistics company) are both now owned by KKR Japan – the Japanese operation of the US owned private equity and investment company, Kohlberg Kravis Roberts.

Back to SoftBank again

If you look at our 30 largest Japan-owned companies in the UK, employing around 65,000 people, you’ll see some surprising names such as Kwik-Fit and The Fulham Shore (owners of The Real Greek and Franca Manca), which was acquired by Toridoll, who have other more obviously Japanese brands such as Marugame Udon. Other companies such as Stapleton’s Tyre Services, the Financial Times, Micheldever Tyre Services, Building Design Partnership and Liberata are also all acquisitions by Japanese companies. And of course, ARM, acquired by SoftBank in 2016, which according to the British government at the time showed Britain’s economy can be successful after leaving the EU. SoftBank then tried to sell ARM to Nvidia, and finally floated it in 2023 – on NASDAQ, rather than the London Stock Exchange.

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Kubota to build excavator factory in Germany

Japanese construction machinery maker Kubota will build a new factory in Germany to produce mini excavators, planning for a long-term rise in demand in Europe despite sluggish demand in the region. Kubota already has a factory nearby employing over 500 people and another factory in France, producing tractors, where it also has an R&D centre. It acquired the Norwegian agricultural machinery manufacturing company Kverneland in 2012.

JERA and BP to merge offshore wind businesses

Japanese energy provider and British oil company BP are to set up a company named JERA Nex bp in the U.K. by next September after they gain approval from authorities. They intend to invest $5.8bn in the 50-50 venture by 2030. Both have been struggling to achieve profitability in offshore wind due to rising costs. Presumably it is hoped that the larger scale of the merged business will help to find economies. The new company will be the fourth largest industry player in terms of the amount of offshore wind power capacity, including those under development.

JERA already has offices in London and Amsterdam. Its subsidiary JERA Trading acquired EDF Trading’s coal and freight business Amstuw BV, which operates the Rietlanden coal terminal in the Netherlands, in 2016.

Nippon Life to acquire Resolution Life

Nippon Life is negotiating to acquire Bermuda headquartered Resolution Life for $8.2bn, making it the biggest ever acquisition by a Japanese insurer. The last major acquisition in this sector was MS&AD acquiring UK non-life insurance and reinsurance company Amlin in 2015 for $5.3bn.

Resolution Life was founded by British philanthropist Sir Clive Cowdery and was a consolidator of closed book insurance – taking on life insurance policies from companies that wanted to focus their business elsewhere. As it was originally headquartered in the UK, many of the brands it now looks after are British, but it also has businesses in Australia and the USA – all together employing around 1,800 people. It moved its headquarters to Bermuda and had investments from private equity group Blackstone and Nippon Life. Nippon Life is now negotiating to acquire Blackstone’s share.

Nippon Life had already been seconding staff to Resolution Life to understand the closed book business and has been helping Resolution Life expand its business in Japan. Nippon Life has both a branch office and an investment subsidiary in London, employing around 30 people and an office in Germany.

It has been lagging behind on overseas expansion compared to other Japanese insurance companies, with only 4% of core profit coming from its overseas business, compared to Dai-ichi Life’s 34% in 2022.

Marubeni-Itochu Steel adds another British company to its supply network

Marubeni-Itochu Steel has acquired Scotland based plate processor Angus F. Gunn via its UK subsidiary Barclay & Mathieson. This adds to Marubeni-Itochu Steel’s capacity to supply British oil and gas, renewable energy and construction industries.

Marubeni-Itochu Steel accquired Glasgow based Barclay & Mathieson in 2022. It has around 400 employees, whereas Angus F. Gunn has 25 employees. Marubeni-Itochu Steel Europe is based in Germany, with a branch in London, alongside Marubeni-Itochu Tubulars, which employs around 50 people, with operations in Milan and Algiers.

Toppan to acquire Swedish Assa Abloy’s Citizen ID business

Toppan will acquire the Citizen ID business of HID Global Corporation, which is in turn owned by Sweden’s Assa Abloy. Although Assa Abloy is Swedish, HID Global is headquartered in the USA, and Toppan say they are acquiring it to expand their global security business in South America, Africa, and other regions. HID Global has operations in Czech Republic, Ireland, France, Poland, Switzerland and the UK – although to what extent these businesses will now be split up is not yet clear.

The acquisition is part of Toppan’s goal to pursue US$326m of overseas acquisitions by the end of fiscal 2025, shifting its business focus from printing to security and packaging. Toppan used its financial subsidiary set up in Singapore last year to secure stable financing for acquisitions and other investments for the acquisition of the CID business.

Nippon Paint acquires US-Swiss specialty chemicals firm AOC for $2.3bn

Nippon Paint is acquiring AOC from private equity firm Lone Star, with the deal expected to finalise in the first half of next year.

AOC is a global manufacturer of coatings, colorants, and composite resins. It was known as AOC Aliansys until 2018 – a combination of US based AOC and Switzerland based Aliansys. Lone Star acquired AOC from CVC Capital Partners in 2021.

Nippon Paint has made other global acquisitions in recent years, including France’s Cromology and the DuluxGroup in Australia. The acquisition of AOC will add operations in Czech Republic, France, Germany, Italy, Switzerland, the Netherlands and the UK to Nippon Paint’s presence in Europe.

Nippon Paint had 33,000 employees in 2023, 89% of whom were based overseas.

Nippon Express acquires German logistics company Simon Hegele

Japanese logistics company Nippon Express has acquired German logistics company Simon Hegele Group. Simon Hegele Group has almost 2,800 employees in around 50 locations, mostly in Germany but also including the UK and Turkey. Simon Hegele is to continue with its current structure and management.

This adds to the acquisitions that Nippon Express made in 2023 of Austrian company Cargo-Partner and Switzerland based Tramo Group and the 3,500 employees of Nippon Express owned companies in Europe, Middle East and Africa.

Japan’s Wacoal acquires UK’s Bravissimo

Japanese women’s underwear maker Wacoal Holdings will acquire UK headquartered Bravissimo Group for £45.7 ($61.3 million). Bravissimo is a retailer specialising in larger sizes, with both stores and an e-commerce side. It is mainly focused on the UK market, employing 458 people.

Wacoal acquired British lingerie manufacturer Eveden in 2012 which manufactures brands such as Fantasie and Freya, employing around 350 people in the UK and another 75 or so in France. It also has operations in New York, Australia and the Netherlands.

UK second largest recipient of Japanese overseas M&A deals – but far behind USA

We were surprised to see that the UK was second only to the USA as the location for Japanese overseas M&A deals in 2023, according to Recof, as the number and scale of deals we were aware of in the UK seemed to have died down considerably over the past 10 years. Then we looked more closely and realised that of the 660 overseas acquisitions Recof has recorded, 220 were in the USA, and only a fifth of that (44) in the UK. The third and fourth ranked countries were Singapore and India – so it was not a case that acquisitions were shifting to continental Europe either.

We have been aware of 16 acquisitions in the UK in 2023, mostly by the larger Japanese companies – logistics and food related acquisitions have been a particular focus. So it seems likely the other acquisitions were made by smaller Japanese companies. One such did cross our radar recently – Japanese entertainment company GENDA acquired Lemonade by Lemonica – another Japanese company, thereby acquiring Lemonade Lemonica UK. Lemonade Lemonica was, as you might imagine from the name, a drinks company. The UK operation was started in 2021 under the name Pino Pino Zaurus and has only 1 employee. GENDA have now established GENDA Europe, in the UK, to support the growth of Lemonade Lemonica, and because “the UK is one of the best places for Japanese companies to build their management base in terms of business environment and systems.” GENDA has been rolling up many Japanese entertainment related companies, so perhaps further acquisitions are to come, impacting Europe.

Last updated by Pernille Rudlin at 2025-05-13.

Category: M&A