Japanese Companies and U.S. Acquisitions under Trump

By Anton Bridge and Miho Uranaka

Overview

TOKYO (Reuters) – Japanese companies will find it easier to gain approval for U.S. acquisitions under the incoming Trump administration, according to Masuo Fukuda, the vice chairman of Citigroup in Japan. This comes despite Trump's opposition to Nippon Steel's attempted buyout of U.S. Steel.

Changes in the Landscape

Fukuda mentioned that the Trump presidency will encourage business reorganizations, increasing the number of acquisition targets for Japanese firms. The proposed $15 billion takeover of U.S. Steel by Nippon Steel faces significant challenges, including antitrust and national security reviews, as well as opposition from both Trump and President Joe Biden, alongside the United Steelworkers union.

Opportunities for Japanese Firms

Despite these challenges, a broader relaxation of regulations could create fresh opportunities for Japanese companies, who are significant investors in the U.S. Japan's outbound M&A inquiries are anticipated to rise, as noted by Citi’s head of M&A, Yoshinobu Agu.

Agu highlighted that many U.S. entities were previously cautious due to the strict rules set by the Federal Trade Commission. However, with changing leadership, this might provide a new opportunity for Japanese firms. Legal experts suggest that the merger review guidelines under the Biden administration, perceived as overly restrictive, may be rejected under Trump.

Inbound M&A Market

Citi also holds optimistic expectations for Japan's inbound M&A market, which has reached a record $82 billion this year, marking a significant increase from the previous year, despite a global downturn in deals.

Recent Japanese M&A guidelines, aimed at facilitating more transactions, alongside increased expectations regarding capital efficiency from institutional investors, will drive Japanese firms towards M&A activities in the upcoming years. According to Agu, the trend of Japanese companies reorganizing their portfolios to enhance shareholder profit and value will lead to more favorable acquisition targets.