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Fujitsu To Buy Siemens' Stake of JV; Japan Inc.'s Global M&A Rises

Posted by: Kenji Hall on November 4, 2008

Add Fujitsu to the list of Japan’s blue chips on the hunt for acquisitions. On Nov. 4, Fujitsu said it will pay 450 million euros for Siemens’ 50% of their nine-year-old European joint venture in computers. (Siemens reportedly was demanding 1 billion euros.)

One reason for the buyout is that Fujitsu hopes to use the venture, called Fujitsu Siemens Computer, as a base for an aggressive overseas expansion of its built-to-order server business, Fujitsu’s President Kuniaki Nozoe told journalists. That’s key because Fujitsu’s substantial clientele in Japan probably won’t be upgrading their computer systems as the economy turns south. Fujitsu needs to shift gears and target emerging markets, in Russia, India and China, where there’s far more upside potential. Nozoe also said the arrangement was convenient because the 10-year joint-venture contract was to expire next September.

The deal with Siemens gives the Japanese tech giant a chance to remake its overseas operations as Nozoe sees fit. Conveniently, Siemens also wants out of IT so it can channel resources into its core energy, health care and industrial infrastructure areas.

That should give analysts something to cheer about. Many of them downgraded Fujitsu’s stock last week after the company warned that its full-year operating profit would probably be 31% lower than expected on weakness in semiconductor chips, hard disk drives, PCs and mobile phones.

Fujitsu announcement dovetails with the trend of a strong yen giving Japan Inc. an advantage in overseas deals. It’s difficult to generalize whether the collapse of the U.S. subprime mortgage market, recent financial market turmoil and expected economic slowdown have been a factor in Japan Inc.’s buying frenzy. But the tally is already at a record high and, as long as there are healthy global lenders (the Japanese banks, for instance), it could keep going up.

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