Bolstered by a strong yen and sitting on piles of cash, Japanese companies have already spent $66bn in 559 overseas acquisitions so far this year and were already on track to top last year's record of $84bn, according to data provider Dealogic.

A person with knowledge of the negotiations said yesterday that Softbank, the country's third largest carrier by subscribers and a provider of Apple's iPhone, is in advanced talks to buy Sprint in a deal expected to exceed $12.8bn.

If the deal goes through, it could rank as the third biggest foreign purchase by a Japanese company on record. The biggest was Japan Tobacco's $19.1bn purchase, including debt, of the UK's Gallaher Group in 2006. That was followed by Takeda Pharmaceutical's $13.7bn purchase of Swiss drug maker Nycomed last year, according to Dealogic.

With a growing subscriber base helped by iPhone sales, Softbank wouldn't necessarily fall into the category of a cash-flush Japanese corporate giant pressured to go overseas by the shrinking home market.

Still, it has been a very active player on the merger and acquisition field, recently announcing plans to acquire smaller domestic rival eAccess through a stock swap deal valued at $2.3bn. The company's biggest acquisition to date was a $17bn acquisition of the Japanese arm of Vodafone in 2006.

Helped by both a solid capital base and cheap borrowing costs, Japanese companies have also emerged as strong buyers of US assets as appetite for M&A deals elsewhere wanes due to the global economic slowdown.

In late May, Japanese trading house Marubeni agreed to buy US grain handler Gavilon Group in a deal worth as much as $3.6bn, excluding debt. In August, Japan's Daikin Industries, the world's biggest air conditioner company, agreed to pay $3.7bn to acquire US. peer Goodman Global.

But Japan's track record in managing US firms has been mixed. Toshiba's $5.4bn acquisition of US nuclear plant builder Westinghouse Electric in 2006 is often cited as one of the few successful examples.

One deal that flopped was NTT Communications' $5.5bn buyout of US Internet service provider Verio at the height of the technology bubble in 2000. The investment was later written off, as the Japanese company struggled to integrate the company into its global operations.

While questions hang over the ability of Japanese companies to run overseas operations, M&A bankers and lawyers say there are few signs of a slowdown in the country's buying binge, and more deals in their pipelines.

Financial News