JAPAN: An Introduction to Corporate/M&A: Domestic
Recent Trends in the Japanese M&A Market (January–June 2025)
According to RECOFDATA, one of the most reliable M&A statistical data sources in Japan, the number of M&A deals by Japanese companies in the January–June 2025 period was 2,509. This is an increase of 167 deals or 7.1% from 2,342 deals in the same period of 2024, marking the highest level for two consecutive years. The total deal value in the January–June 2025 period reached JPY20.7173 trillion (approximately USD140 billion), a significant increase of approximately 2.1 times or JPY10.7666 trillion (approximately USD73 billion) compared to JPY9.9507 trillion (approximately USD67 billion) in the same period of 2024. This surpassed the previous highest amount for the January–June period of JPY19.6882 trillion (approximately USD133 billion) set in 2018, establishing a new record.
The largest deal by value was Toyota Fudosan’s acquisition of Toyota Industries Corporation for JPY4.684 trillion (approximately US32 billion). The second- and third-largest deals were both IN-OUT transactions by SoftBank Group: capital participation in US-based OpenAI Global LLC for JPY4.4856 trillion (approximately USD30 billion), and acquisition of US semiconductor design company Ampere Computing for JPY973 billion (approximately USD6.5 billion). Overall, there were 22 deals valued at more than JPY100 billion each (approximately USD676 million).
M&A deals involving investment firms acquiring Japanese companies numbered 565, up 7.6% from 525 in the same period of 2024. The total deal value increased 2.5 times to JPY3.3497 trillion (approximately USD23 billion) from JPY1.3363 trillion (approximately USD9 billion) in 2024. Notably, foreign private equity funds have intensified support for listed companies’ business restructuring and management buyout (MBO) initiatives.
Carve-out deals, whereby listed companies sell subsidiaries or business units, totalled 268 – a substantial 32% increase from 203 in the same period of 2024, setting a new record for the period. Meanwhile, business succession M&A also rose 4.5% to 492 deals from 471 in 2024.
In Japan, the number of tender offers (TOBs) filed – excluding self-tender offers – was 68, which is 1.8 times the 38 cases in the same period of 2024. This pace is on track to exceed the previous annual record of 104 cases in 2007. The total purchase amount was JYP7.5923 trillion (approximately USD51 billion), already surpassing the previous annual high of JPY5.1498 trillion (approximately USD35 billion) in 2020.
Among the 2,509 deals, M&A involving start-up companies numbered 669 – a 5.1% decrease from 705 in the same period of 2024.
Amendment of Tender Offer Rules
In 2024 and 2025, the most important development in M&A law and regulation is the amendment of the Financial Instruments and Exchange Act (FIEA), which will revise the rules regarding tender offers. The amended bills of FIEA were passed in May 2024, with the amended relevant ordinances published in July 2025 and scheduled to come into effect on 1 May 2026.
The main amendments were:
- lowering the one-third threshold of a mandatory tender offer to 30% in line with that of other major jurisdictions; and
- mandatory application of a tender offer for the acquisition of shares in excess of 30%, even through market trades, which are currently not subject to the requirement of a tender offer.
With this amendment, the previous complicated regulations were eliminated, including abolishment of the restrictions on “rapid purchase” – namely, the regulations that had restricted cases where an acquirer obtains voting rights in excess of one-third of the total voting rights through the acquisition of listed shares through a combination of transactions within and outside the market within three months, without a tender offer process. As a result, the requirements for triggering a tender offer have been organised into only two categories:
- situations where a purchase is made and the shareholding ratio exceeds 30% (including further purchase by a purchaser who already owns more than 30%); and
- situations where a purchase is made through off-market transactions from more than 10 parties within 61 days, including the day of the purchase, and the shareholding ratio increases from more than 5% to 30%.
This amendment may have several practical implications. Among them, the “rapid purchase” rule – as amended – will no longer prohibit transactions in which a buyer acquires listed shares held by a parent company or major shareholder up to 30% or less outside the market and then makes a tender offer to acquire more than 30% of the shares. Until now, if a hostile bidder initiated a tender offer after a friendly bidder – to form an alliance – acquired less than 30% of the target’s shares outside the market from a major shareholder of the target company, the friendly bidder could not initiate a competing tender offer for three months as a white knight because of the “rapid purchase” rule. However, after the amendment, such transactions will generally be possible.
The amendments also include revisions that could have the effect of reducing “parent-subsidiary listings”. Under the existing regulations, a parent company holding more than 50% of the shares of a listed subsidiary can purchase up to two-thirds of the shares without a tender offer as an “exempt purchase”. Based on this exemption, there have been cases of tender offers to convert listed companies into subsidiaries, where the limit of shares to be purchased is set at a level between 51% and less than two-thirds, and the target company maintains its listing after becoming a subsidiary, and then acquires additional shares up to two-thirds without a tender offer for various purposes.
However, under the current amendment, this exemption will be eliminated. A major shareholder holding more than 30% will only be able to buy an additional 0.5% of the company's shares within a six-month period without needing to initiate a tender offer, as an exception to the second above-listed category. As the methods for parent companies to purchase more shares of listed subsidiaries narrow, there may be fewer cases where the limit on the number of shares that can be purchased is set at less than two-thirds in a tender offer so as to maintain the listing of the target company.
Revisions to the Listing Rules Regarding MBOs and Subsidiary Conversions
On 14 April 2025, the Tokyo Stock Exchange (TSE) announced a proposal to revise the listing rules regarding MBOs and subsidiary conversions. This came into effect on 22 July 2025.
Previously, a listed company had to obtain an opinion stating that the transaction will not undermine the interests of minority shareholders when the controlling shareholder decides to convert the listed company into a wholly owned subsidiary, but the rules did not mention where the opinion should be obtained. However, it had become common practice in such situations to obtain an opinion from a special committee composed of outside directors, outside company auditors and outside experts with no vested interest. Thus, the rules were revised to explicitly state that such opinion must be obtained from such special committee.
Also, the scope of situations in which such opinion must be obtained has been extended to include an MBO or a conversion into a wholly owned subsidiary by:
- a company that has a common parent company with the target company;
- a company that holds a 20% or more stake in the target company; and
- the parent company or subsidiaries of the company that holds a 20% or more stake in the target company.
Given that the former rules required the opinion to state that the transaction would not undermine the interests of minority shareholders, there were cases where a special committee delivered an opinion of “not undermining the interests” just because general shareholders would be allowed the opportunity to sell their shares at a price with a certain premium, despite their concerns about the fairness of the price. In order to ensure that an opinion is provided from the perspective of whether the increase in corporate value resulting from the transaction is fairly allocated to general shareholders, the new rules explicitly require an opinion stating that the transaction is fair to general shareholders.
To ensure the fairness of the price, the TSE now requires the target company to disclose more detailed information on the share valuation calculation, such as the thought process behind setting the financial forecasts period and the assumptions used in financial forecasts.