Panasonic is paying $7.1bn to acquire US supply chain software company Blue Yonder in a deal that highlights the changing global business environment of the pandemic and a resurgence of overseas acquisitions by Japanese companies.
Under the agreement announced on Friday, Panasonic will build on the 20 per cent stake it acquired in Blue Yonder last year. It will buy the remainder of the company from private equity groups Blackstone and New Mountain Capital in a deal that, including debt, values the target at $8.5bn.
The US group’s enterprise value has jumped from $5.5bn a year ago as supply chain disruptions during the pandemic boosted demand for software that helps companies manage logistics and shipping. Earlier this month, Blue Yonder revealed that it was preparing to go public after filing paperwork with the Securities and Exchange Commission.
For Panasonic, the deal will allow it to combine Blue Yonder’s software with its traditional business of selling hardware such as security cameras. It will be the group’s biggest overseas acquisition and the first under its new chief executive Yuki Kusumi, who took up the post this month.
Blue Yonder, which had more than $1bn in revenue last year, serves 3,000 customers including Coca-Cola, Walmart, Caterpillar and Best Buy.
Software has been a weak spot for Japanese hardware companies, prompting rival Hitachi to buy GlobalLogic, a Silicon Valley software engineering company, for $9.5bn last year.
Before the pandemic, outbound mergers and acquisitions by Japanese companies had been growing strongly, with a succession of record years and landmark megadeals that included the $31bn acquisition of the UK chip designer Arm by SoftBank in 2016 and the $62bn purchase of Shire by Takeda in 2019.
The deals had a consistent pattern, according to bankers: companies forced by Japan’s shrinking population to look overseas for growth and disruptive technologies developed in the US and elsewhere prompting Japanese companies to pursue M&A to remain competitive. A third source of pressure on many Japanese companies has been more vocal investors calling for higher returns.
The pandemic, which limited international travel and made hands-on due diligence more difficult, caused a sharp slowdown in outbound deals in 2020.
But in the first quarter of 2021, said Bank of America analysts in a note this week, Japan’s overseas dealmaking staged a surprise resurgence. Companies collectively undertook $29bn in cross border M&A, the highest January to March figure of recent years, involving a near-record high of 110 deals.