Japan Leads Asian M&A Market "Revival Craze", with Transaction Volume Tripling in the First Half of the Year.

In 2025, Japan is leading the Asia-Pacific M&A market recovery, with M&A deals totaling $232 billion in the first half of the year. Bankers expect this trend to continue due to billions of dollars in privatization deals, overseas investments, and private equity activities. According to LSEG data, the value of transactions involving Japanese companies more than tripled in the first half of the year, while M&A deals in Asia-Pacific reached $650 billion, more than double compared to the same period last year. Management reforms aimed at resolving the long-standing issue of undervaluation of Japanese companies are sparking strong interest from foreign and aggressive investors. Bankers also note that Japan's low interest rates (favorable for transactions) mean the demand for more deals remains strong. Bankers say that the Japanese government's requirements to improve corporate governance (including privatization of listed subsidiaries and Japanese companies seeking new growth avenues through overseas acquisitions) will continue to drive the occurrence of large transactions. Additionally, they note that despite wider political and macroeconomic uncertainties, Japan has largely been unaffected by global volatility, which helps support the momentum of transactions. Several companies under Toyota Motor Corp. Sponsored ADR (TM.US) and telecommunications giant Nippon Telegraph and Telephone Corporation acquired some privately listed subsidiaries for $34.6 billion and $16.5 billion respectively, making these two transactions among the largest in the world. Kei Nitta, global head of Nomura Securities' M&A business, said, "There are many similar deals in the pipeline, and the number of such transactions is increasing." SoftBank Group led a new round of financing for chatbot manufacturer Siasun Robot & Automation's OpenAI with a scale of up to $40 billion, making it the largest private tech financing transaction ever. Although the global economic situation is becoming more uncertain, the trend of Japanese companies actively seeking overseas markets for growth opportunities has not changed. Financial Institutions in Japan, such as insurance companies Dai-ichi Life Holdings, Inc. and Nomura Holdings, Inc. Sponsored ADR, have announced significant transactions, with bankers saying demand across industries remains strong. Nitta said, "The ongoing tariff disputes and international conflicts mean some investment decisions take longer than usual, and some clients are becoming more cautious, but we believe the willingness to invest remains very strong." Nitta also added that in the past two years, as global enterprises reassess their supply chains and resource allocation, Japanese companies have become targets for acquisition. However, Japanese deal activity faces some obstacles that may slow down the process. The uncertainty of the global economic outlook makes it more difficult to assess the future growth prospects of companies, leading to disagreements in valuation expectations between buyers and sellers. Atsushi Tatsuguchi, head of Mitsubishi UFJ Morgan Stanley Securities' M&A advisory division, said this has led to an increasing number of deal failures. As part of corporate reform efforts, companies are facing increasing pressure to divest non-core business segments, which are increasingly being acquired by private equity funds. Seven & I Holdings, operator of 7-11 convenience stores (which itself faced a takeover bid from Canadian competitor ACT), sold a series of large stores and other ancillary business segments for approximately $5.5 billion in March to Bain Capital. Yusuke Ishimaru, senior deputy director of M&A advisory division at Mitsubishi UFJ Securities, said, "The trend of divesting non-core assets of operating companies will continue in the short term." Bankers say there are currently many potential transaction opportunities involving private equity firms. Potential transactions to be announced in the second half of the year include the acquisition of Japanese cybersecurity company Trend Micro, which has a market value of 1.32 trillion (approximately $8.54 billion). Companies reported to be bidding earlier this year include Bain Capital and EQT. Ishimaru said, "Private equity funds are also seen as ideal buyers for taking listed companies private."