Goldman’s Yano Says Japan Inc. M&A ‘Breaking Boundaries’

When a 210-year-old vinegar company bought Unilever (UNA)’s Ragu and Bertolli pasta sauce business last month, it showed Japanese companies are becoming more adventurous in their search for growth, said Goldman Sachs Group Inc. (GS)’s head of mergers and acquisitions in the nation.

Japan M&A is breaking boundaries,” Yoshihiko Yano, who is also a participating managing director at the U.S. firm, said in an interview. “We have to be more creative and steer away from biases and assumptions like ‘This company will normally do this,’ or ‘This type of move may happen in this industry.’”

Japanese companies are pursuing mergers at home and abroad to counter a shrinking population, and Yano said they’re increasingly taking advantage of low borrowing costs and rebounding share prices to help fund transactions. Takeovers involving the nation’s companies were valued at $56.7 billion in the six months ended June 30, up from $49.1 billion a year earlier, data compiled by Bloomberg show.

“The financing environment is favorable and share prices are high, which is different from the era when banks were struggling with bad loans,” Yano said in the June 24 interview in Tokyo, referring to Japan’s financial crisis in the 1990s.

Photographer: Daniel Acker/Bloomberg

Unilever's Ragu brand pasta sauce sits on display in a supermarket in Princeton, Illinois, U.S. Close

Unilever's Ragu brand pasta sauce sits on display in a supermarket in Princeton, Illinois, U.S.

Photographer: Daniel Acker/Bloomberg

Unilever's Ragu brand pasta sauce sits on display in a supermarket in Princeton, Illinois, U.S.

Goldman Sachs was ranked fourth among advisers on Japanese mergers in the first half, down from second for all of last year and third in 2012, according to the data. The firm advised Mizkan Group on its $2.15 billion purchase of Ragu and Bertolli, the third-biggest transaction in the country this year.


Morgan Stanley (MS) was No. 1 in the first half, after advising Unilever on the same deal, as well as Suntory Holdings Ltd. on the whiskey maker’s $15.9 billion purchase of U.S. distiller Beam Inc., Japan’s largest takeover for 2014, the data show. Credit Suisse Group AG was second and Centerview Partners LLC was third.

M&A has room to grow in Japan, where annual deals usually total about 3 percent of the market value of publicly traded companies, compared with 6 percent in the U.S., Yano said.

The value of companies traded on the Tokyo Stock Exchange was 468 trillion yen ($4.6 trillion) as of June 30, according to the bourse. Japan mergers equated to 1.2 percent of that amount in the first six months, or 2.4 percent on an annualized basis, data compiled by Bloomberg show.

Mizkan completed its purchase of the pasta sauce assets on June 30. The transaction is the biggest ever for the closely held company, which was founded in 1804 to make vinegar from the leftovers of sake production. The deal was funded with loans from banks including Bank of Tokyo-Mitsubishi UFJ Ltd.

More Acquisitions

“We will continue to consider acquisitions and alliances,” Handa, Aichi Prefecture-based Mizkan said in an e-mailed statement to Bloomberg News on July 7. “There are no immediate plans for another large deal while we integrate the pasta sauce business into our operations.”

More domestic companies will be forced to combine as the shrinking population saps consumer demand, said Yano, who was promoted to participating managing director in 2012. The title is held by more than 400 of Goldman Sachs’s highest-ranking employees, who own about 10 percent of the firm and are known within the company as partners -- a nod to its past as a private partnership. The title comes with a salary of at least $900,000 and a share of a special bonus pool tied to the firm’s results.

“I wouldn’t be surprised to see some restructuring happen soon as there are so many companies competing in shrinking industries in Japan,” he said. “Anything could happen in any industry.”

To contact the reporter on this story: Takahiko Hyuga in Tokyo at

To contact the editors responsible for this story: Russell Ward at Darren Boey

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