04 Mar Japan’s Global M&A: Japan Post
Japan Post’s unforeseen acquisition of Australia’s Toll Holdings was like a lightning bolt demonstrating the new global strategy being pursued by many Japanese companies. Toll, which itself built its own business through many acquisitions rather than organic growth, is a model which historically Japanese companies have eschewed. Toll had made a foray into the Japanese market, one of the few large Australian companies to do so, when it paid A$95m in 2009 for one of the top ten logistic companies in Japan called Footwork Express. (In 2012 this was rebadged Toll Express Japan.) Underperformance of the business caused by both internal and external factors saw the subsidiary undergoing a significant restructure and turnaround.
The change in Japanese corporate strategy is being driven by a few factors:
- massively cashed up Japanese companies
- declining population in Japan
- requirement to rely less on exports and more on overseas sourced income
The dilemma for Japanese companies is that there is a shortage of globally experienced Japanese management talent. Understanding the differing corporate governance regimes in different jurisdictions is another problem. On making the announcement about Toll, the President of Japan Post was quoted in Japan’s Nikkei as saying “We are buying the time we would have spent for growth”. This does explain the motivation behind the aggressive valuations that Japanese companies are placing on these types of deals. In acquiring the management expertise of Toll, Japan Post can help mitigate this human resource deficiency.