By Anton Bridge, Miho Uranaka, and Kane Wu

Japan’s M&A Surge in 2025

TOKYO/HONG KONG (Reuters) – Japan is leading Asia’s M&A resurgence in 2025, with a record $232 billion in deals during the first half. Bankers anticipate this trend will continue, driven by multi-billion dollar take-private arrangements, outbound investments, and robust private equity activity.

Factors Behind the Surge

Management reforms aimed at addressing low valuations in Japanese firms are attracting significant foreign and activist investor interest. Additionally, Japan’s low interest rates create a conducive environment for deal-making, fuelling continued interest.

M&A Statistics

In the first half, M&A activity involving Japanese companies more than tripled, contributing to Asia’s total M&A value of $650 billion, which is more than double compared to the previous year, according to LSEG data.

Government Support

Bankers attribute the rising deal momentum to government encouragement for better corporate governance, including privatization of listed subsidiaries. Outbound investments by Japanese firms seeking growth are also pivotal in sustaining mega-deals.

Market Resilience

Despite global volatility and macroeconomic uncertainties, Japan’s market has remained relatively insulated, fostering deal momentum.

Notable Transactions

Key transactions include $34.6 billion taken private by Toyota Motor group companies and $16.5 billion by Nippon Telegraph and Telephone, marking some of the largest deals globally.

Kei Nitta, global head of M&A at Nomura Securities, stated, “There are many other deals like these on the way, and their number is increasing.”

Private Equity Activity

SoftBank Group spearheaded a historic fundraising of up to $40 billion for ChatGPT maker OpenAI, the largest private tech funding round to date.

Japanese firms continue to pursue growth abroad due to a shrinking domestic market, with institutions like Dai-ichi Life and Nomura Holdings announcing significant deals, sustaining robust demand across various industries.

Hurdles Ahead

However, challenges could impede deal-making. Uncertainty about the global economic outlook complicates company valuations, leading to a disconnect between buyer and seller expectations, resulting in failed deals.

Corporate Reform and Asset Sales

Companies face pressure to divest non-core units, increasingly targeting private equity funds. Seven & I Holdings sold parts of its business to Bain Capital for $5.5 billion in March, highlighting current trends.

Yusuke Ishimaru from SMBC Nikko Securities indicated that carve-outs of non-core assets will persist in the near future.

Future Prospects

The pipeline of potential deals remains strong, including an acquisition bid for Japanese cybersecurity firm Trend Micro, which has a market value of 1.32 trillion yen ($8.54 billion), with bidders like Bain Capital and EQT.

“Private equity funds are also seen as promising buyers for taking listed companies private,” Ishimaru remarked.