The Australian

Japanese giant moves to drive offshore growth

- RICK WALLACE

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.

 ?? JEREMY PIPER ?? Toru Takahashi with Toll chair Ray Horsburgh yesterday
JEREMY PIPER Toru Takahashi with Toll chair Ray Horsburgh yesterday

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