Uniqlo’s Yen in U.S. May Turn American Eagle Japanese: Real M&A
Uniqlo is a wholly owned subsidiary of Fast Retailing Co. Ltd. It is a Japanese casual wear designer,manufacturer and retailer. It is also considered the leading clothing retail chain in Japan based on sales and profits. Uniqlo operates in various countries worldwide including China, France, Hong Kong,Malaysia, Russia, Singapore, South Korea, the United Kingdom, and the United States.
Japan’s economy has strengthened from the recession caused by the March earthquake. Thisgrowth, in part, has been a result of companies’ efforts to restore supply chains and to increase export levels. Hence, the Yen has become stronger with a post World War II high of 75.35 against the USDollar on October 31st.
Tadashi Yanai, the Chief Executive Officer of Japan-based Fast Retailing, is looking forward to making acquisitions in order to expand in the U.S where there areonly three Uniqlo stores in New York. By doing this, he expects to increase the firm’s global sales to more than $60 billion. Taking into account the increased strength of the Yen, the slow U.Seconomic recovery, the stock market valuation decline, and the US Dollar’s weakening, it would be more affordable for Uniqlo to buy than to build and acquiring American companies is a great opportunitygiven the economic conditions of both countries.
Although Yanai has not confirmed which companies he is looking to acquire, rumors are that the two candidates would be American Eagle, known for itsjeans and preppy shirts and/or Aeropostale, known for its casual clothing targeted at 14-17 year olds. These two acquisitions would complement the Uniqlo brand and it would also allow the enterprise topenetrate mall-based shoppers all over America. One more reason that makes these two companies the perfect acquisition is that they both have more cash than debt and a “store base that can be...