Nidec to buy Emerson motor unit

Nidec, the world’s biggest manufacturer of computer hard disc motors, said on Wednesday it would acquire a unit of Emerson Electric of the US in the latest example of a Japanese company exploiting the yen’s strength to expand overseas.

The Kyoto-based company did not disclose financial details but its president, Shigenobu Nagamori, suggested at a news conference that the company had paid $600m-$700m for the motors and controls business, which includes factories in the US, Mexico, the UK and China.

Most Japanese technology companies view the yen’s surge to a 15-year high against the dollar as a debilitating handicap, since it makes their exports less competitive against products from weaker-currency countries such as South Korea and China.

But Mr Nagamori – one of Japan’s most acquisitive chief executives – welcomed the increase in the yen’s buying power as an opportunity to pick up foreign assets. “All you ever hear is gloomy news about the strong yen, but there is a good side too,” he said.

Overseas expansion has become an urgent goal for many Japanese companies as the country’s domestic consumption shrinks, hurt by a declining population and an economy that has spent much of the last two decades in distress.

Kirin, one of Japan’s leading beer companies, owns Lion Nathan National Foods in Australia and last month bought a stake in Fraser and Neave , the largest beverage company in Malaysia and Singapore.

Among the other deals announced this summer JFE, Japan’s second-largest steelmaker, paid about $1bn for a minority holding in JSW Steel in India; the brokerage Daiwa Securities agreed to pay $1bn for KBC’sglobal convertible bond and Asian equity derivatives businesses; and Rakuten, Japan’s largest online shopping site, bought Buy.com in the US and PriceMinister in France.

According to data from Thomson Reuters, Japanese groups have spent $27bn on foreign acquisitions so far this year, not including the Nidec deal, compared with $21bn for all of 2009.

Many of the buyers have been relatively new to the takeover game, as Japanese companies have traditionally avoided mergers and acquisitions except in cases of severe financial distress – such as those that forced the country’s banking and steelmaking sectors to consolidate in the 1980s and 1990s.

Nidec is a conspicuous exception, however, having bought 30 companies in Japan and overseas since 1984. “I would buy every electric motor maker in the world if I could,” Mr Nagamori said on Wednesday. “I’m always thinking about acquisitions.”

Nidec’s business plan envisions an almost fourfold increase in sales, to Y2,000bn, by the financial year to March 2016.

In taking over the 6,000-worker motor manufacturing business from St Louis-based Emerson, Mr Nagamori said he wanted to expand beyond the small computer motors that are Nidec’s speciality. Emerson makes larger motors used in air conditioners, electric appliances and automobiles, including electric and hybrid vehicles.

Shares in Nidec closed up 3.4 per cent after the announcement, beating a 0.9 per cent rise for the Nikkei 225.