While Japanese M&A activity has been sluggish since 2005, deals this quarter have increased 28 percent to $22 billion on a quarter-on-quarter basis, Matsui and five other analysts and strategists wrote in the report. The strong yen, which increases Japanese companies' buying power abroad, is near a 15-year high against the dollar, according to data compiled by Bloomberg.
Chinese companies spent $120 million in the first half of this year to acquire Japanese enterprises, according to the report. That was a six-fold increase as Chinese firms sought to gain brands, technology and distribution networks, Matsui said.
Also, a selloff of cross-holdings is increasing the percentage of free-float shares on the market, which will make acquisitions easier, Matsui wrote. The ratio of cross-held shares to free-float shares fell to 32.6 percent in March from 34.8 percent a year earlier, the report said. Meanwhile, the amount of cash held by nonfinancial companies on the Topix's first section reached a record high of $580 billion in March, increasing the "firepower for acquisitions," the report said.
(The Japan Times)