Key Takeaways
- • Japan recorded 3,883 M&A transactions involving Japanese companies between January and September, the highest count for the same period since 1985, according to data from M&A research agency Recope Data cited by the Nihon Keizai Shimbun.
- • Acquisitions of Japanese companies by foreign investors reached 326 deals, up more than 20% year on year, with acquisition value rising about 40% to roughly 6.2 trillion yen.
- • Total M&A value involving Japanese companies fell about 20% to 22 trillion yen, largely because of mega-transactions in the prior year such as NTT's acquisition of NTT Data Group.
- • Overseas private equity funds led large deals, including Apollo Global Management's roughly 590 billion yen acquisition of Nippon Sheet Glass and KKR's roughly 500 billion yen purchase of a chemical company's holding entity.
- • A weak yen, Japan's tighter foreign exchange screening rules, and corporate carve-outs are cited as drivers, while business succession M&A reached 833 sales transactions, the highest since 2007 per Lekoff.
Summary
M&A activity involving Japanese companies reached a record for the January to September period, with 3,883 transactions recorded, according to the Nihon Keizai Shimbun on October 13, citing data from M&A research agency Recope Data. The count, which dates to 1985, includes domestic transactions, acquisitions of foreign companies by Japanese firms, and acquisitions of Japanese companies by foreign investors.
Foreign acquisitions of Japanese companies were a central driver. There were 326 such deals in the period, more than 20% above the prior record for the same timeframe, and acquisition value rose about 40% to approximately 6.2 trillion yen. Nine-month foreign acquisition value already exceeded the full-year figure for last year and ranks third among annual records. Total M&A value for Japanese companies nonetheless declined about 20% to 22 trillion yen, reflecting the prior year's concentration of mega-deals, including NTT's full acquisition of NTT Data Group.
Overseas private equity funds led the largest transactions. Apollo Global Management acquired glass manufacturer Nippon Sheet Glass for about 590 billion yen and took it private, and KKR agreed to purchase a chemical company's holding entity for about 500 billion yen. A contested situation around Kakaku.com, operator of the restaurant information service Tabelog, saw European firm EQT launch a tender offer, with Bain Capital joining a competing bid alongside Rain Yahoo (as named in the source), pushing proposed prices higher. EQT raised an Asia-Pacific fund of $15.6 billion in April, and Bain Capital formed a $10.5 billion Asian fund in May, with about half expected to target Japan.
Analysts attribute the activity to several factors. A weaker yen allows foreign investors using dollar-denominated funds to acquire more assets for the same capital. Daiwa Research Institute senior consultant Nobuyuki Yoshida said private equity firms are increasingly acting as agents of corporate reorganization, citing subsidiary sales, business succession acquisitions, and funding and management support for unlisted companies. Japanese corporates are also pursuing carve-outs to improve capital efficiency following the Tokyo Stock Exchange's 2023 call for attention to cost of capital. Renesas Electronics' sale of its timing components business to U.S. chip designer Cytime, expected to contribute about 443.3 billion yen in sales profit, was cited as an example.
Policy changes are also relevant. Japan plans to implement revised foreign exchange rules in January, with full application from February, expanding screening to indirect foreign investment and to domestic entities under foreign control that pose security risks. The Ministry of Economy, Trade and Industry's 2023 guidelines on company acquisitions call for boards to fairly consider specific and feasible takeover proposals. Changes to the minimum tax regime for ultra-high-income earners, starting next year, reduce the special deduction from 330 million yen to 165 million yen and raise the applicable rate from 22.5% to 30%, giving founders an incentive to complete share sales this year. Business succession sales reached 833 transactions between January and September, up more than 10% year on year and the highest since 2007, according to Lekoff.
Foreign acquisitions of Japanese companies were a central driver. There were 326 such deals in the period, more than 20% above the prior record for the same timeframe, and acquisition value rose about 40% to approximately 6.2 trillion yen. Nine-month foreign acquisition value already exceeded the full-year figure for last year and ranks third among annual records. Total M&A value for Japanese companies nonetheless declined about 20% to 22 trillion yen, reflecting the prior year's concentration of mega-deals, including NTT's full acquisition of NTT Data Group.
Overseas private equity funds led the largest transactions. Apollo Global Management acquired glass manufacturer Nippon Sheet Glass for about 590 billion yen and took it private, and KKR agreed to purchase a chemical company's holding entity for about 500 billion yen. A contested situation around Kakaku.com, operator of the restaurant information service Tabelog, saw European firm EQT launch a tender offer, with Bain Capital joining a competing bid alongside Rain Yahoo (as named in the source), pushing proposed prices higher. EQT raised an Asia-Pacific fund of $15.6 billion in April, and Bain Capital formed a $10.5 billion Asian fund in May, with about half expected to target Japan.
Analysts attribute the activity to several factors. A weaker yen allows foreign investors using dollar-denominated funds to acquire more assets for the same capital. Daiwa Research Institute senior consultant Nobuyuki Yoshida said private equity firms are increasingly acting as agents of corporate reorganization, citing subsidiary sales, business succession acquisitions, and funding and management support for unlisted companies. Japanese corporates are also pursuing carve-outs to improve capital efficiency following the Tokyo Stock Exchange's 2023 call for attention to cost of capital. Renesas Electronics' sale of its timing components business to U.S. chip designer Cytime, expected to contribute about 443.3 billion yen in sales profit, was cited as an example.
Policy changes are also relevant. Japan plans to implement revised foreign exchange rules in January, with full application from February, expanding screening to indirect foreign investment and to domestic entities under foreign control that pose security risks. The Ministry of Economy, Trade and Industry's 2023 guidelines on company acquisitions call for boards to fairly consider specific and feasible takeover proposals. Changes to the minimum tax regime for ultra-high-income earners, starting next year, reduce the special deduction from 330 million yen to 165 million yen and raise the applicable rate from 22.5% to 30%, giving founders an incentive to complete share sales this year. Business succession sales reached 833 transactions between January and September, up more than 10% year on year and the highest since 2007, according to Lekoff.
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