Record US$350 billion deals boom fuels upbeat M&A outlook in Japan
Corporate governance reforms aimed at improving shareholder returns are helping to transform the country into a hive of activity
IT HAS been a record year for deals involving Japanese companies, with transaction volume approaching US$350 billion as December draws to a close. And next year is poised to be even busier.
Corporate governance reforms aimed at improving shareholder returns are helping to transform Japan into a hive of activity – the days when it was seen as a slow market with an occasional megadeal thrown in are disappearing fast.
“Dealmaking in Japan is incredibly busy,” said Chris Laskowski, head of Asia investment banking at Jefferies Financial Group. “I spend a lot more time talking to our colleagues there now than any time before.”
The ground is fertile, with conglomerates selling non-core assets and private equity firms hungry to deploy capital. Activism is also playing a stronger role – take Elliott Investment Management’s battle with none other than Toyota Motor around a blockbuster plan to privatise Toyota Industries.
“Japan is going through a wave of M&A (mergers and acquisitions) like we’ve not seen for a long time,” said Mayooran Elalingam, head of investment banking and capital markets for Asia-Pacific at Deutsche Bank.
Just on Friday (Dec 19), Mitsubishi UFJ Financial Group confirmed it will take a 20 per cent stake in India’s Shriram Finance for about US$4.4 billion.
Japan is one of Asia’s most mature markets and home to some of the biggest transactions, so M&A can translate into higher fees for dealmakers. No surprise, then, that global firms including Citigroup, Goldman Sachs Group and Jefferies are bulking up their teams.
This year has been bookended by a takeover fight between global buyout firms KKR and Bain Capital over software firm Fuji Soft, and now Carlyle Group’s launch of a takeover offer for Hogy Medical.
“We’re likely to see many more take-privates in Japan,” said Rohit Chatterji, head of M&A for Asia-Pacific at JPMorgan Chase. They will include “listed affiliates that are deemed core to the parent, or of stand-alone companies where traded valuations are not reflective of intrinsic value”.
One of the biggest deals involved Nippon Telegraph and Telephone Corp taking over NTT Data Group for more than US$16 billion. Meanwhile, Nippon Steel finally closed its acquisition of US Steel.
Some hiccups
There are still some challenges with transactions in Japan, according Ian Ho, a partner at law firm Simpson Thacher & Bartlett in Hong Kong.
“Having deep business relationships and local talent are key,” said Ho, who is also co-head of the firm in Asia. “While the interest and opportunities are real, it may take some time for some of the newcomers to gain significant traction.”
One headline-deal casualty this year involved the Japanese operator of 7-Eleven stores. Canada’s Alimentation Couche-Tard ended up abandoning its US$46 billion bid after a roughly year-long campaign, saying that Seven & i Holdings had refused meaningful engagement. The Japanese firm rejected that charge.
Busy year
Ultimately, though, 2025 is a big success story for Japan-related deals.
Other multibillion-dollar cases include SoftBank Group acquiring Ampere Computing from a consortium including Carlyle and Oracle for US$6.5 billion, as well as a US$5.8 billion buyout of SCSK by Sumitomo Corp. SoftBank has also been part of massive funding rounds for OpenAI and is eyeing more data centre deals.
Financial sponsors focused on buyouts in the lower-to-mid tier have been prolific, too, with investors allocating more capital to Japan, as well as markets such as India and South Korea.
“While the deals may be smaller in value, they are generating solid returns,” said Adam Furber, also at Simpson Thacher as a partner and co-head of Asia.
More to come
On dealmaking channels, a fruitful corridor is emerging between Japan and India, as Friday’s MUFJ-Shriram Finance deal shows. Another Japanese bank, Mizuho Financial Group, also announced it was buying a controlling stake in KKR-backed investment bank Avendus Capital.
Adding to the M&A pile leading into 2026, Taiyo Holdings is up for grabs, with KKR the front runner among private equity firms vying for the chemical manufacturer, people familiar with the matter said on Friday. BLOOMBERG
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