The following is excerpted from IRG's weekly stock report:
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- NTT DoCoMo Inc. (DCM) will buy a 26 percent stake in Indian mobile phone carrier Tata Teleservices Ltd. for about US$2.7 billion as Japanese companies buoyed by the strength of the yen keep up their hunt for assets overseas even as the sluggish local economy crimps earnings at home. NTT DoCoMo will buy up to 20 percent of the outstanding common shares of Tata Teleservices through a joint tender offer with Tata Sons Ltd., a prime promoter for Tata companies. The additional 6 percent stake will be purchased from existing shareholders. The company may consider raising its stake in Tata Teleservices to more than 50 percent. As part of the alliance, three DoCoMo executives plan to join Tata Teleservices' board. Facing a declining market at home as the population shrinks, Japanese companies have been increasingly interested in expanding their businesses overseas and they have the necessary cash to finance these purchases. Not including the DoCoMo-Tata deal, they've spent US$61 billion shopping abroad, the biggest sum since records started in 1980.
- Panasonic Corp. (PC) agreed to buy smaller electronics rival Sanyo Electric Co. (OTC:SANYY). The companies have not reached agreement on price but could value Sanyo at 862 billion yen (US$8.8 billion). Sanyo looked for a merger to finance the huge investments needed to expand production. Meanwhile, Panasonic is looking for new growth engines as it braces for a tougher economic climate and sluggish demand in Japan, its main market. The deal would allow Goldman Sachs Group Inc., one of Sanyo's biggest shareholders, to unload a key investment in Japan and bolster its balance sheet. Goldman and Japanese financial companies Sumitomo Mitsui Banking Corp. and Daiwa Securities SMBC Co. together acquired 300 billion yen in preferred shares in 2006.