China's Hobbled Dealmakers Yield Foreign M&A Crown to Japan Inc.

(Bloomberg) -- Japan Inc. is on track to overtake China in overseas dealmaking for the first time in six years.

A hunt for growth at Japanese firms is driving foreign purchases, at a time when China's most prolific acquirers have been hobbled by regulatory probes and new outbound investment rules. Japanese companies have announced $26.9 billion of overseas acquisitions this year, compared with $16.5 billion by Chinese buyers, according to data compiled by Bloomberg.

The boldest example yet of Japan's newfound confidence came last week, when Takeda Pharmaceutical Co. said it's considering a deal for rival Shire Plc to expand in areas including neuroscience and cancer drugs. The year's tally for Japanese outbound deals could rise above $91 billion if a Shire acquisition is announced, based on the U.K.-listed company's current enterprise value. That would surpass the amount of deals for all of 2017.

Fujifilm Holdings Corp. jumpstarted the acquisition wave in January when it agreed to buy control of Xerox Corp., the iconic maker of printing equipment, in a deal creating a company with $18 billion in annual sales.

While Japan Inc. contemplates megadeals, embattled Chinese conglomerates HNA Group Co. and CEFC China Energy Co. have started selling many of the trophy assets they bought overseas. Regulators seized control of Anbang Insurance Group Co., owner of New York's Waldorf Astoria hotel, in February and its dealmaking founder was charged with fraud.

In that environment, it's no wonder the country's corporate chieftains are shying away from splashy purchases. The biggest single Chinese acquisition announced this year was worth only $1.1 billion, the Bloomberg-compiled data show.

--With assistance from Jeff Sutherland

To contact the reporter on this story: Ben Scent in Hong Kong at bscent@bloomberg.net.

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net, Paul Panckhurst

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