Were considering alliances and acquisitions, and OYL is one of them, said Kazuhiro Matoba, a spokesman for Osaka-based Daikin. The Japanese company will sign an agreement today to buy OYL for about $2.1 billion, the Nihon Keizai newspaper reported earlier, citing unidentified Daikin officials.
The acquisition would almost triple Daikins sales in North America, where it trails United Technologies Corps Carrier unit and American Standard Cos. Japanese companies have announced $15.9 billion of overseas acquisitions this year, compared with $12.9 billion for all of 2005, Bloomberg data show.
Daikin is just another example that Japan is back, said Jesper Koll, chief economist at Merrill Lynch & Co in Tokyo. Japan is going to be buying the world. The deal comes as the worlds second-largest economy heads for its biggest expansion since the end of the second World War II. Bloomberg
The Bank of Japan may lift its monthly outlook to indicate the economy can withstand higher interest rates, which have been near zero since March 2001.
The company plans to buy about 50% from OYL executives and offer to buy all remaining shares, the Nihon Keizai said. Kuala Lumpur-based OYL has a market value of $2 billion and is controlled by Malaysian billionaire Quek Leng Chan.
The acquisition will help Daikin grab share in the US, where the company hasnt been able to grow, said Yoichiro Watanabe, an analyst at Mito Securities in Tokyo.
OYL started out in 1974 making gas cookers. It expanded into air- conditioning and fridges two years later, and in 1986 listed on the Kuala Lumpur Stock Exchange.
Daikin last week said net income rose 5.1% to 40.7 billion yen, or 154.25 yen per share, in the year ended March 31, Sales gained 8.8% to 792.9 billion yen.
Sales at OYL climbed 11% to 5.52 billion Malaysian ringgit ($1.5 billion) in the year ended June 2005. The company, which focuses on large air conditioners used in offices and shops, earned 39% of its revenue from the US.