Nippon Steel's US setback a wake-up for Japan Inc's foreign forays
Repeats for early Asia morning readership. No change to text.
By Kane Wu, Yantoultra Ngui and Miho Uranaka
HONG KONG/TOKYO, Sept 6 (Reuters) -Japanese firms are set to scrutinise overseas deals more intently after U.S. resistance to Nippon Steel's 5401.T $15 billion U.S. Steel X.N purchase, advisers said.
Any U.S. move to block Japan's Nippon Steel would be "very unsettling", one of the front-runners to become the next Japanese premier told Reuters, and could dent trust between the allies.
Reuters reported this week that the White House is close to announcing President Joe Biden will block the $15 billion U.S. Steel deal on national security grounds.
Both buyers and sellers of assets were already taking more time analysing political trends and scrutinising whether a target is in an industry that might trigger state intervention, one Tokyo-based banker told Reuters.
As one of Washington's closest allies, Japan has not had any issues with U.S. regulators in recent years and companies in the country have been assessing assets abroad given a falling yen and stagnant economy at home.
But last week, the Committee on Foreign Investment in the U.S. (CFIUS) said in a letter to Nippon Steel and U.S. Steel that their proposed deal would create national security risks by hurting the steel supply needed for critical U.S. projects.
CFIUS has stepped up its scrutiny since Chinese companies went on a U.S. shopping spree about a decade ago, snapping up assets such as the Waldorf Hotel and tech firm Ingram Micro.
Some advisers said that the Nippon Steel deal was complicated by the U.S. presidential election, with many Republican and Democratic lawmakers voicing opposition to it, but that this could subside after November's vote.
"Whoever wins the election will be under pressure from the financial markets to accept these deals," said Euan Rellie, New York-based co-founder and managing partner of investment advisory firm BDA Partners.
Nevertheless, Japanese companies would be "really, really concerned and shaken up" by the Nippon Steel situation, said a Tokyo-based senior mergers and acquisitions (M&A) banker, who requested anonymity due to the sensitivity of the matter.
If the Nippon Steel deal collapses, break-up fees might increase and buyers will become more cautious, they added.
Outbound M&A from Japan to the U.S., in particular, is up nearly 160% to $32.1 billion so far this year, accounting for 71.4% of Japan's total outbound M&A deal value, versus 38.7% a year earlier, Dealogic data shows.
"The CFIUS decision in this case should not change the policy trend of friend-shoring or Japan's status as a key ally country in the CFIUS review process," said Weiheng Chen, a senior partner at law firm Wilson Sonsini.
Japan saw a 45% jump in outbound acquisition deal value last year to $65.8 billion, the Dealogic data shows, as companies looked to tap alternate revenue streams to soften the impact of a deflationary domestic economy.
Nippon Steel's proposed takeover of U.S. Steel would have been the third-biggest acquisition of a U.S. firm by Japan Inc in a decade after the $21-billion takeover of Speedway in 2020, and $16 billion of Beam in 2014, the data showed.
Rellie said that blocking cross-border M&A would be "bad economics and bad policy" as a "tidal wave" of Asian clients paying up for U.S. and European assets had been forecast.
Reporting by Kane Wu in Hong Kong, Yantoultra Ngui in Singapore and Miho Uranaka in Tokyo; Editing by Sumeet Chatterjee and Alexander Smith
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
