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Outbound deals dominate Japan M&A

With the announcement of the biggest Japanese outbound deal on record—Takeda Pharmaceutical’s acquisition of Shire for $81.45bn—2018 YTD surpassed full-year 2017 for Japan outbound M&A volume. The deal also led to a new record high in the percentage of outbound deals as a share of total Japan M&A volume, based on full-year figures.

The increase in Japanese outbound acquisitions this year is not a one-off; since 2009, outbound’s share of Japanese M&A volume has been on an upwards trajectory. Major factors driving these deals include cheap financing at home, support by the Japanese government for outbound purchases, and companies seeking higher returns.

Jumbo deals are the main drivers

Outbound M&A transactions have a direct impact on Japanese syndicated loans. Takeda Pharmaceutical, for example, signed a $30.8bn bridge facility for its acquisition of Shire, accounting for 26.8% of Japanese loans volume this YTD and pushing the market to a 6-year high. However, the rest of the market has been less active. Excluding Takeda, new M&A-related loans in Japan only saw 7 deals done so far this year, down 58% compared to 2017 YTD.

Historically, M&A loans in Japan have been quite timid, and financing peaks were mainly due to jumbo outbound deals. Examples include Asahi Group Holdings’ $8.0bn facility signed in March 2017 for the acquisition of SABMiller (CEE beer brands), and Softbank Group’s $9.9bn facility signed in September 2016 for the acquisition of ARM Holdings.

Takeda presents undeniable evidence of the current trend in jumbo loans driven by M&A. These deals have already reached $281.4bn globally this year—setting a new YTD record high—making jumbo acquisition-related loans a key feature of 2018.



– Written by Mohammed Raja & Beata Solti
Data source: Dealogic, as of May 15, 2018

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