TOKYO (The WSJ) -- Nidec Corp. has signed a pact to buy Emerson Electric Co.'s motors and controls division, as the Japanese precision motor maker broadens its product scope as well as geographical reach in yet another overseas acquisition.

The Kyoto-based company said Wednesday that it has agreed to buy the U.S. company's industrial, air-conditioning and home appliance motor business in an all-cash deal. Nidec declined to provide the actual value of the transaction, saying in a news release that the “acquisition price is not disclosed based on discussions with Emerson.”
Nidec said it will use cash on hand to acquire the operation, which has 6,000 employees and recorded sales of $836 million in the fiscal year ended September 2009. The business has research and development, production and sales divisions mainly in the U.S., Mexico, the UK and China.
The acquisition is the latest in a string of M&A deals by Japanese companies, empowered by a strong yen as they extend their global reach to counter slow growth and an aging population at home. Among other deals struck in recent weeks, Nippon Telegraph & Telephone Corp. said it will buy South African firm Dimension Data Holdings PLC for $3.1 billion; and in March, Astellas Pharma Inc. bought U.S. company OSI Pharmaceuticals Inc. for about $4 billion in the largest deal of the year.
Nidec has a track record of achieving sales growth through M&A activity. In 2006, it purchased Valeo Motors & Actuators, the motor division of France's Valeo SA, for roughly 22 billion yen ($257.3 million); and in 2007, it bought Hitachi Ltd.'s motor production subsidiary, Japan Servo Co.
In addition to its making small precision motors for IT-related devices, Nidec is moving into the fields of automotive, industrial and home appliance motors.
The expansion is in line with its mid-term business plan, under which it targets group sales of two trillion yen by the fiscal year ending March 2016, compared with 660 billion yen forecast for this year. Nidec said it decided to buy Emerson's motor arm to “ secure a global business base and to complement and expand our product lineup.”
In January 2010, Nidec acquired Sole Motors of Italy to strengthen its home appliance motor business in Europe. By buying Emerson's operation, which has a strong presence in North America, “we intend to scale up our home appliance motor business with a renewed focus on research and development, manufacturing and sales activities.”
Nidec President Shigenobu Nagamori was set to hold a news conference in Tokyo to explain details of the deal Wednesday afternoon in Tokyo.
Investors welcomed the announcement as Nidec shares had risen 4.9% to 7,500 yen by midday Wednesday on the Tokyo Stock Exchange. The deal “will sharply boost (Nidec's) presence in the market for home appliance motors,” said Toru Kitani, an analyst at SMBC Friend Research Center. He added that investors view the deal positively as Nidec is using cash on hand, Emerson is profitable, and because the strong yen is making the M&A environment favorable for Japanese companies.