Strong yen helps drive Japan acquisitions

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Buoyed by a strong yen, Japan's Takeda Pharmaceutical and conglomerate Toshiba on Thursday announced multi billion dollar acquisitions in their sectors as they search for overseas growth.

In one of the biggest overseas acquisitions by a Japanese firm, Takeda said it agreed a 9.6 billion euro ($13.6 billion) deal to buy Swiss drugmaker Nycomed, the equivalent of nearly 80 percent of Takeda's annual sales.

Japanese engineering giant Toshiba said it would buy Swiss utility metering firm Landis+Gyr for $2.3 billion in response to expected growth in worldwide demand for more efficient power grids.

The deals are the latest in a series of acquisitions for Japanese firms as they look to make the most of a strong yen to boost their presence in more lucrative markets overseas to offset limitations in a shrinking home market.

While the strength of the Japanese currency has triggered anguish among exporters who face the erosion of repatriated profits and cost pressures in producing at home, it has also given firms muscle to buy overseas targets.

The yen struck a post-war high against the US dollar in the aftermath of the March 11 earthquake and tsunami, rising to 76.25 against the greenback. It has since fallen back to the high 81 yen level.

For Takeda, the deal with Nycomed will allow Japan's largest drugmaker by revenue to tap into emerging markets demand at a time when pharmaceutical firms worldwide are battling revenue fallout from patents expiring.

"Nycomed enables Takeda to maximise the value of our portfolio and gives us an immediate strong presence in the high-growth emerging markets while doubling Takeda's European sales," Takeda President Yasuchika Hasegawa said in a statement.

Hasegawa later told reporters that a strong yen was positive as the company began negotiations with Nycomed last year, Dow Jones Newswires reported.

Nycomed has strong sales in emerging markets and Takeda has agreed to purchase the shares from private equity funds as it seeks to boost its presence in these markets. The deal excludes Nycomed's dermatology business.

Among Nycomed's products are treatments for lung disease, which Takeda said it expects to be a major source of revenue growth.

Takeda said it will finance part of the transaction through a loan of about 600-700 billion yen ($7.4-8.5 billion) and plans to complete the acquisition by the end of September, subject to antitrust clearance.

Best-known for its Actos diabetes treatment, Takeda generates nearly half of its revenue overseas, but Asia and other regions outside of North America and Europe made up only two percent of its fiscal 2010 sales of 1.42 trillion yen.

The deal continues a recent Japanese spending spree in the pharmaceutical space. In March Japanese drug maker Daiichi Sankyo said it would spend up to $935 million to buy California-based Plexxikon Inc.

Separately Toshiba on Thursday said it had agreed to take the entire equity of Landis+Gyr, a global leader in energy management solutions for utilities.

"The acquisition, valued at $2.3 billion including net debt, will substantially enhance the scope of Toshiba's smart grid and smart community businesses," the Japanese company said in a statement.

Smart grids are intelligent power distribution systems seen as key for both advanced and emerging nations to use energy more efficiently.

The Japanese firm, which bought the US nuclear plant builder Westinghouse Electric in 2006, is a major global player in nuclear power.


© 2011 AFP

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