Japan overseas M&A spree to slow next year

By Junko Fujita and Nathan Layne - Analysis

TOKYO (Reuters) - Dwindling profits may prevent Japanese companies from maintaining their record pace of overseas acquisitions in 2009, but they will remain a major force armed with an abundance of cash and access to credit.

Corporate Japan has scooped up assets battered by the global financial crisis as it expands outside its mature home market, armed with some $660 billion in cash and a strong currency.

Japan's firms have filled a void left by private equity and other potential buyers sidelined by a credit crisis. Japanese banks, which have been hurt but not debilitated by the crisis, remain willing and able to finance deals.

"Wherever we see a deal happening, in London or New York, we look for Japanese companies as potential buyers," said Kenji Fujita, head of Morgan Stanley's M&A team in Tokyo, whose deal pipeline has swelled to three times the size of last year.

"The presence of Japanese companies is now a benchmark to gauge the success of deals."

Japanese firms bought $72.5 billion worth of overseas companies this year, compared with $24.4 billion a year ago, according to Thomson Reuters data. Global acquisitions by private equity firms fell 70 percent to $231 billion.

Headline-grabbing deals this year have included Takeda Pharmaceutical's (4502.T) $8.1 billion acquisition of Millennium.

Nomura Holdings' (8604.T) purchase of failed Lehman Brothers' businesses in Asia, Europe and the Middle East and Mitsubishi UFJ Financial's (8306.T) $9 billion investment in Morgan Stanley (MS.N) have also helped reshape the global banking landscape.