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Japan M&A deals in first half more than triple in value

year-on-year

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M&A surge driven by management reforms, shareholder

activism and

low rates

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Japan is relatively more insulated from global woes,

bankers say

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Asia M&A more than doubled to $650 billion in strong

rebound

By Anton Bridge, Miho Uranaka and Kane Wu

TOKYO/HONG KONG, June 26 (Reuters) - Japan is driving

Asia's M&A rebound in 2025 with a record $232 billion worth of

deals in the first half, and bankers expect the trend to sustain

fuelled by multi-billion dollar take-private arrangements,

outbound investments and private equity activity.

Management reforms to tackle chronic low valuations among

Japanese firms are spurring a flurry of foreign and activist

investor interest, while Japan's low interest rates - which

support deals - mean the appetite for more deals remains strong,

bankers say.

The deals involving Japanese companies more than tripled in

value in the first half, while in the same period Asia M&A value

reached $650 billion, more than double the amount year-on-year,

LSEG data showed.

Bankers say government calls for better corporate

governance, including the privatisation of listed subsidiaries,

as well as outbound acquisitions by Japanese firms seeking new

growth avenues will keep igniting mega deals.

Moreover, Japan has been relatively insulated from global

volatility despite the broader geopolitical and macroeconomic

uncertainty, helping to underpin deals momentum, they say.

A cohort of Toyota Motor ( TM ) group companies and

telecoms giant Nippon Telegraph and Telephone ( NPPXF ) took

private listed subsidiaries in deals worth $34.6 billion and

$16.5 billion respectively, among the largest transactions

globally.

"There are many other deals like these on the way and their

number is increasing," said Kei Nitta, global head of M&A at

Nomura Securities.

SoftBank Group also led a new fundraising of up to

$40 billion into ChatGPT maker OpenAI in the biggest private

tech funding round in history.

The long-standing trend of Japanese firms looking abroad for

growth opportunities in the face of a shrinking home market has

continued despite heightened uncertainty in the global economy.

Japanese financial institutions, such as insurer Dai-ichi

Life ( DCNSF ) and Nomura Holdings ( NMR ), announced major

deals and bankers say demand remains robust across industries.

"Debates over tariffs and foreign conflicts mean that some

investment decisions are taking longer than usual and some

customers have become more cautious, but we consider appetite

for investment itself to remain very strong," Nitta said.

Japanese firms themselves have also become more attractive

acquisition targets as global firms have reconsidered their

supply chains and distribution of resources over the past two

years, Nitta added.

However, there are some hurdles that could slow dealmaking

in Japan.

Uncertainty around the global economic outlook has made

assessing companies' future prospects more difficult, leading to

a disconnect in valuation expectations between buyers and

sellers.

This has caused an increasing number of deals to fail, said

Atsushi Tatsuguchi, head of the M&A advisory group at Mitsubishi

UFJ Morgan Stanley Securities.

As part of the corporate reform drive, firms are under

rising pressure to offload non-core business units, with private

equity funds increasingly the destination for the hived off

parts.

Convenience store operator Seven & I Holdings ( SVNDF ) -

itself the target of a buyout bid from Canadian rival

Alimentation Couche-Tard ( ANCTF ) - sold off a bundle of its

superstores and other peripheral business units to Bain Capital

for some $5.5 billion in March.

"Carve-outs of operating companies' non-core assets will

continue to be a trend in the near term," said senior deputy

head of M&A advisory at SMBC Nikko Securities, Yusuke Ishimaru.

Bankers say there is a strong pipeline of potential deals

involving private equity firms.

Potential deals to be announced in the second half include

an acquisition of Japanese cybersecurity firm Trend Micro ( TMICF )

which has a market value of 1.32 trillion yen ($8.54

billion).

Bidders included Bain Capital and EQT, Reuters reported

earlier this year.

"Private equity funds are also seen as promising buyers for

taking listed companies private," Ishimaru said.