Other recent cross-border deals by Japanese firms include mobile carrier SoftBank's $21.6 billion takeover of US-based Sprint-Nextel and Mitsubishi UFJ, the country's biggest lender, buying Thailand's Bank of Ayudhya for $5.6 billion. Japanese drinks giant Suntory said earlier this month it would buy the top-selling Lucozade and Ribena brands from British drugs firm GlaxoSmithKline (GSK) for $2.1 billion.
The moves are aimed at expanding beyond Japan's borders where firms are wrestling with unfavourable demographics as the population rapidly ages while the birth rate falls. Despite a sharp decline in the yen over the past six months, the Japanese currency's historically high levels in recent years made firms' overseas acquisitions relatively cheaper.
Lixil is joining up with the government-backed Development Bank of Japan to complete the takeover, which includes the assumption of debt. "This transaction represents the largest-ever German investment by a Japanese company," Grohe said in a statement.
Grohe's owners, investment fund TPG and Credit Suisse's private equity arm, have been actively trying to sell the company but also eyed a share offering if any buyout plan collapsed, the Wall Street Journal reported earlier. Lixil shares were up 3.91 percent to 2,099 yen with Grohe confirming the deal after the Tokyo market had closed Thursday. The stock fell more than six percent when the Journal reported the deal this week, as investors fretted that any share sale to fund the Grohe purchase could dilute the value of their stock.
"The transaction represents a significant step in the successful implementation of Lixil's strategy to become the global leader in the building materials and housing equipment industry," it said in a statement. Lixil President Yoshiaki Fujimori described Grohe as one of the "most well-known brands in the global sanitary market".
Grohe, which said its chief executive David Haines would remain in his job, has about 9,000 employees worldwide and reported sales of $1.4 billion euros ($1.9 billion) last year. By acquiring the German firm, Lixil will be able to ramp up its business in Europe. Two years ago, the Tokyo-based company bought Italian construction engineering group Permasteelisa for about 575 million euros.
(AFK via GlobalPost)