 "Image via Shutterstock")
Japanese companies, which embarked on a $210 billion global acquisition spree over the past three years, are getting a surprise bargain out of Brexit.
The yen soared Friday to the highest in more than two years, boosting local firms' purchasing power for deals abroad and potentially saving them hundreds of millions of dollars on purchases they've already announced. NTT Data and Asahi Group are among Japanese companies with a combined $23 billion of overseas acquisitions agreed to in the past 12 months that are still pending, data compiled by Bloomberg show.
The unexpected windfall could offer a small silver lining as export-driven corporate Japan braces for economic uncertainty, with the Topix index falling Friday by the most since 2011. Canon, the world's biggest camera maker, warned that British voters' decision to leave the European Union could undermine the economic recovery in Japan, while automotive supplier Exedy said it may consider moving its office out of the UK.
"It's a bargain for those Japanese firms which have built cash in yen at home and have an acquisition deal in the works," Makoto Shiono, a Tokyo-based partner at merger advisory firm Industrial Growth Platform, said by phone Friday. "The cost of their deals clinched in US dollars and euros has gotten lower."
Japan's currency jumped as much as 7.2 per cent Friday, the most in more than three decades, and strengthened past 100 per dollar for the first time since 2013. It is now up 17 per cent since the start of the year. The yen gained as much as 10 per cent against the euro.
The biggest pending outbound deal from Japan is NTT Data's $3.1 billion purchase of Dell's technology services businesses. NTT Data, an arm of the former Japanese telephone monopoly, clinched the deal in March when the dollar was valued at about 113.45 yen.
