Japanese giant moves to drive offshore growth
JAPAN Post Holdings, the world’s 13th-largest company on one measure, is a massive conglomerate with postal, banking and insurance arms that touch the lives of almost every Japanese citizen.
The group is the largest employer in Japan and its banking arm is said to hold the largest pool of private savings in the world.
But with the corporatised giant heading towards a float, the exposure of its postal arm to the declining domestic market has become all too apparent.
In one $6.5 billion swoop, Japan Post declared its intention to become a global logistics player and free itself of the tyranny of demographics.
By acquiring Toll Holdings, Japan Post can give itself an instant overseas presence, particularly in fast-growing Asian nations, that could counterbalance weakness in its home market where an ageing population and tepid growth are expected to take their toll.
Pricewaterhouse-Coopers’ Jason Hayes, a partner and head of the firm’s Japan practice in Asia, said the deal was one of the 10 largest outbound merger and acquisition plays involving Japanese companies in the past four years and was a win for both companies.
“Absolutely. It puts them up in the top five logistics companies globally,” Mr Hayes said.
“Japan Post has expanded into China, but they aren’t global yet.
“It’s that aspiration to become global and seek sustainable profits that is driving this, particularly against the backdrop of them going to an IPO (initial public offering).
“And to have a quality brand such as Toll Holdings in the group I think is an excellent positive.”
Japan Post chief executive Toru Takahashi said the deal would be concluded before the float later this year and the company hoped “that this deal will have a beneficial impact on the IPO”.
The IPO — in which the banking and insurance arms will go public — is thought to be the biggest sale of a government-owned asset in Japan in two decades.
Japan Post’s only significant offshore subsidiary, before the Toll acquisition, was in China.
Mr Hayes said Japan Post was typical of a large cohort of Japanese companies that had been slow to move on becoming global, but more and more domestically focused firms were taking their first steps in the broader world.
“It’s clearly no surprise that they are pushing ahead with their global expansion plans,” Mr Hayes said.
“Many Japanese companies have been in a state of suspended animation in terms of coming to grips with globalising, but now we are seeing many of them starting to move.”
Mr Hayes said Australia was already seeing that activity among smaller companies such as Rinnai and Recruit Holdings buying Australian businesses in recent months in the lead-up to this mega deal.
Japan Post has total assets of some 295 trillion ($3.16 trillion) including its mail, banking and insurance service.
The group has more than 240,000 employees across Japan.