M&A

Largest Japanese companies in the UK – 2023

We’ve decided to stop trying to compile the Top 30 largest Japanese employers in the UK by corporate grouping. Partly this is because a substantial number of Japanese companies in the UK have become branches, so do not report their employee totals to Companies House. Another reason is that corporate groups have restructured substantially through divestment, so there are more subsidiaries which are equity affiliates rather than part of the consolidated company group, or are owned by KKR Japan (does this make them Japanese or not?). Finally, many of the largest Japan-owned companies were acquired through acquisition, but are not particularly “Japanese” in terms of their branding or executives.

Instead, we thought we’d look at the largest single Japan-owned companies – and it turns out that there are 31 who have over 1,000 employees. The full list can be downloaded for free on the link below.

The new entrant into this Top 31 in 2023 was Snowfox, a food processing company acquired by Zensho. Snowfox owns Taiko, who make sushi for Waitrose and Sainsburys and also owns the YO! Sushi restaurant chain, as well as chains in the USA and Canada.

In terms of growth, we already covered the fact that some of Dentsu UK’s and Dentsu International’s growth was due to the consolidation into Dentsu UK of its regional subsidiaries in Leeds, Edinburgh and Manchester, but there does also seem to be organic growth, and growth by acquisition too. The other companies showing double digit growth are mostly in the services sector – Yusen Logistics, Mitsubishi HC Capital and NTT Data. Only one manufacturer is showing double digit growth – Fujifilm Diosynth Biotechnologies – a contract development and manufacturing organisation in Teesside.

The automotive sector has shrunk further –  Nissan, Marelli (formerly Calsonic Kansei) and Honda Motor Europe had smaller workforces in 2023 than in 2022. Toyota has yet to file its accounts for 2023.

At risk of shrinkage or closure in the years to come look to be Hitachi Rail, whose contracts being built at its Newton Aycliffe plant come to an end in 2024 and Fujitsu, who has told staff that they will run down their Ireland operations, taking on no new contracts. This could be a pilot for what is to come in the UK.

Click here for free download of the largest Japanese companies in the UK 2023

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Germany’s AEQUITA acquires German subsidiary of Japan’s Nifco

AEQUITA has added another Japanese company to its collection, following its acquisition of Nisshinbo’s TMD Friction last year.  It will acquire the German subsidiary of Nifco, which was itself a German company KTW, acquired by Nifco in 2014. Nifco Germany develops and produces injection-molded plastic components for the automotive industry, with around 766 employees in Germany, as well as operations in the USA and Serbia.

We assume this acquisition does not impact Nifco UK (which was Elta Plastics, acquired in 1990) or Nifco Poland, which we believe to be a greenfield investment. Nifco had already sold its Spanish subsidiary to Grupo Taurus in 2022.

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Mitsubishi Pencil acquires German pen maker Lamy

Mitsubishi Pencil has acquired the Germany company, C. Josef Lamy GmbH. Mitsubishi Pencil say they made the acquisition in order to expand overseas and move into higher price ranges, as the stationery market in Japan is expected to shrink amid the country’s falling birth rate and digitalization efforts.

Mitsubishi Pencil was already present in Europe – with headquarters in France and operations in the UK and Spain, employing around 100 people in total – they are most well known for their uni-ball rollerball pens. Lamy has around 380 employees.

Another area of collaboration is likely to be digital writing technology.

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Yusen Logistics acquires UK Enterprise Carrier Management company Global Freight Solutions

Yusen Logistics, part of the NYK Group, has acquired Noel Topco, which in turn owns Global Freight Solutions, via its subsidiary International Logistics Group. Yusen Logistics acquired ILG in 2018 bringing in omnichannel fulfilment solutions for e-commerce brands, with operations in 13 bespoke facilities in the UK and EU. GFS adds to this “advanced multi-carrier ECM technology, including higher checkout conversion, reduced cart abandonment and increased repeat-purchase.”

The NYK Group of companies in the UK now employ over 2,500 people, of which Yusen Logistics UK is the largest employer – the 14th biggest Japan owned company in the UK by our estimates, with 1,692 employees. ILG has 479 employees and Noel Topco 156.

Yusen Logistics sees this acquisition as part of their strategy to differentiate themselves from other companies by adding new platform services. “Our group aims to further grow our logistics business by building a solid business foundation in the e-commerce market, which is expected to continue expanding.”

UPDATE – in presumably related news, Yusen Logistics has announced it is investing £280m to acquire a new net zero warehouse in Northampton from real estate company SEGRO group, scheduled to open in April 2025.

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Daikin acquires Robert Heath Heating

Daikin Industries has acquired British company Robert Heath Heating, which handles the installation and maintenance of residential heating systems. In Europe, Daikin is focusing on heat pump heating, which has high energy-saving performance. The company will expand its installation and after-sales service network in the UK in anticipation of a growing shift from combustion heating systems that use gas and other sources. Robert Heath employs around 255 (June 2023 – Companies House) to 450 (according to Daikin) people in the UK.

The heat pump market has been rapidly expanding in recent years as countries have provided subsidies against the backdrop of rising awareness of decarbonization and the demand for energy that is not reliant on Russia. Although there was a decline in 2023 compared to the previous year due to falling gas prices and reductions in subsidies, Daikin’s Chairman Inoue Noriyuki said that “this remains a promising market that is expected to grow significantly over the medium to long term.”

One of the other issues for heat pump installation has been a shortage of skilled labour – we wonder whether Daikin hasn’t also acquired Robert Heath as a way of ensuring stable access to engineers who can fit their systems, and also with the intention of using the company to expand and train up the workforce in the UK. Daikin already has around 490 employees in the UK and over 11,000 in the Europe, Middle East and Africa region.

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Japanese trading company Itochu acquires UK’s Fettle Bike Repair

Japanese trading company Itochu has acquired the British company Fettle Bike Repair, through its subsidiary Kwik-Fit and ultimately the holding company European Tyre Enterprises.

It’s a small scale deal – Fettle was only founded in 2019, is loss making on a £750,000 turnover, employing 24 people, but has been in an operational partnership with Kwik-Fit since March l2023, establishing a total of three joint centres: two in London and one in Bristol in South West England.  Fettle will be accessing Kwik-Fit’s nationwide network.

Itochu  see this deal as part of their commitment to sustainable development goals, as well as growth area, with the rise of e-bikes, and companies having fleets of e-cargo bikes and delivery bikes. Or as they put it “the realization of social systems that have a low environmental impact and the development of a sustainable society by meeting demand for the repair of diversified means of transportation and servicing of increasingly diverse means of transportation and building a network for after-sales services in the mobility market.”

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Sumitomo Corporation and Osaka Gas sell Sutton and East Surrey Water

Japanese trading company Sumitomo Corporation and Osaka Gas have sold their 50/50 ownership of the UK utility Sutton and East Surrey Water for £380m (including £291m in debts) to the Pennon Group plc, a UK based water utility company. Sumitomo Corp and Osaka Gas set up a joint venture for the ownership of Sutton and East Surrey Water in 2013. In October 2023, Ofwat named SES Water among the four worst performing water companies financially in the UK, calling for them to turn around their finances. According to the FT, Sumitomo and Osaka Gas did not want to put equity in the business, so decided to sell and paid a £7.8m dividend last year.

Sumitomo say it has sold off its share as part of its portfolio reshuffle under its Medium-Term Management Plan “SHIFT 2023” and is “executing strategic asset replacement”. It will continue to reinforce and develop its primary earning pillars by “leveraging its strengths utilizing management capital including operation know-how acquired from this UK water business.”

Pennon also owns South West Water, Bristol Water and Bournemouth Water. South West Water was fined £2.15m for illegal sewage dumping in April 2023. SES Water was fined £300,000 in October 2022.

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