While Japanese companies have been investing in Israel for the past two decades, M&A activity has picked up significantly, concentrated in the science and technology (S&T) sectors.
“Japanese investors have traditionally taken a low-key, under-the-radar approach with Israel, typically conducting ‘silent investments’ to keep deals from their competitors’ knowledge,” says Tokyo-based Morrison & Foerster partner Randy Steven Laxer, co-chair of the firm’s Global Corporate Department. “The trend now, however, is toward a more open and enthusiastic approach.”
Highlighted by the Japanese e-commerce company Rakuten’s $900 million acquisition of Israel founded Viber Media in early 2014, there have been 94 Japanese investments in Israeli high tech, totaling $1.64 billion, since 2000.
“Both countries have highly developed S&T sectors, and each of these, due to their respective lack of natural resources, is advancing for economic development,” says Silicon Valley-based of counsel Gal Eschet, head of Morrison & Foerster’s Israel Desk, pointing to the recent bilateral technology cooperation agreement between the countries. “While Japan and Israel are well matched at the negotiating table, each focused on building relationships, it will be interesting to see how they balance their traditional approach to decision making, with Israelis typically moving faster than the more deliberate Japanese approach.”