Sony, Toshiba get state funding for outbound investment
Sony Corp. and Toshiba Corp. will be the first companies to receive capital from a $100 billion government fund set up last year to finance overseas acquisitions and minimize the impact of a rising yen. The strength of Japan’s currency has hurt export earnings for local companies but also facilitated a wave of outbound M&A.
Sony will borrow $1.36 billion to help finance its buyout of the Sony Ericsson Mobile Communications joint venture, while Toshiba will get $1 billion from lenders to support its purchase of Swiss firm Landis+Gyr. The Japan Bank for International Cooperation will lend $819 million to Sony and $600 million to Toshiba, with a several commercial banks putting up the rest.
The low interest rates charged on the loans will hold down the companies' acquisition costs.
Toshiba has already received government assistance in its acquisition of Landis+Gyr through Innovation Network Corp. of Japan (INCJ). The state-owned private equity firm, set up in 2009 to support the growth of new business, agreed to pay $680 million for a 40% stake in the Swiss electronic-metering company, with Toshiba taking the remaining 60%. The deal was worth $2.3 billion, including debt.
INCJ's support reportedly allowed Toshiba to outbid TPG Capital and EQT Partners for the asset, but other private equity firms are benefiting from the surge in Japanese outbound investment. For example, Pacific Equity Partners and Unitas Capital exited New Zealand-based Independent Liquor to Asahi for NZ$1.525 billion ($1.27 billion) last August.
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