Retail in Asia

In Markets

Corporate Japan loses the urge to merge

At the start of 2010 Japan awaited what should have been one of the nation’s biggest mergers ever. The proposed USD25 billion deal would combine two of its big drinks makers to create an Asian beverage giant bigger than Coca-Cola by sales, and with the wherewithal to take on the biggest brewer of them all, Anheuser-Busch Inbev. Instead, the two companies – Kirin and closely held Suntory – abandoned talks in February. Their story points to a bigger problem in Japan right now: the market for corporate control is drying up at a time when Japanese companies need to be consolidating to stay competitive against fast-moving peers elsewhere in Asia.

The failure of the Kirin-Suntory deal is not the only Japanese tie-up to fall apart recently. The basic problem is that Japanese executives don’t feel any urge to merge, especially now that their corporate survival seems a little more assured as the economy starts to recover.