Japan: A Corporate/M&A: Domestic Overview
Recent Trends in the Japanese M&A Market (January-December 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 2025 was 5,115, which is an increase of 415 deals or 8.8% from 4,700 deals in 2024, marking the highest level for two consecutive years. The total deal value in 2025 reached JPY35.7437 trillion (approximately USD223 billion), a significant increase of approximately 175% compared to JPY20.4616 trillion (approximately USD128 billion) in 2024. This surpassed the previous highest amount of JPY29.6887 trillion (approximately USD186 billion) set in 2018, establishing a new record.
The largest deal by value was Toyota Fudosan’s acquisition of Toyota Industries Corporation for JPY4.6840 trillion (approximately USD29 billion). The second largest deal was IN-OUT transactions by SoftBank Group: capital participation in US-based OpenAI Global, LLC for JPY4.4856 trillion (approximately USD28 billion). The third largest one was the acquisition of major US aircraft leasing company Air Lease Corporation (ALC), valued at JPY1.0878 trillion (approximately USD6.8 billion) by a consortium comprising Sumitomo Corporation, SMBC Aviation Capital, Apollo Global Management of the United States, and Canada’s Brookfield Asset Management. Overall, there were 14 deals valued at over JPY500 billion (approximately USD3.1 billion).
M&A deals involving investment firms acquiring Japanese companies in 2025 numbered 1,154, up 5.1% from 1,098 in 2024. The total deal value expanded 184% to JPY6.7409 trillion (approximately USD42 billion) from JPY3.6685 trillion (approximately USD23 billion) in 2024. Notably, foreign private equity funds have intensified support for listed companies’ business restructuring and management buyout (MBO) initiatives.
In Japan, the number of tender offers (TOBs) filed, excluding self-tender offers, was 135, which is 135% of the 100 cases in 2024, exceeding the previous annual record of 104 cases in 2007. The total purchase amount was JPY10.6453 trillion (approximately USD67 billion), surpassing the previous annual high of JPY5.1498 trillion (approximately USD32 billion) in 2020.
Amendment of Tender Offer Rules
The amendment of the Financial Instruments and Exchange Act (FIEA) is scheduled to come into effect on 1 May 2026. The main amendments were (i) lowering the one-third threshold of a mandatory tender offer to 30% in line with that of other major jurisdictions and (ii) mandatory application of a tender offer for the acquisition of shares in excess of 30%, even in a market trade, 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: (i) 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 (ii) situations where a purchase is made through off-market transactions from more than ten parties within 61 days, including the day of the purchase, and the shareholding ratio increases from more than 5% to 30%.
There may be several practical implications from this amendment. 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 acquired less than 30% of the target shares from a major shareholder of the target company outside the market, to establish an alliance, 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 less than two-thirds of the shares without a tender offer as an “exempt purchase”. Based on this exemption, there have been tender offer cases to convert listed companies into subsidiaries, where the limit of shares to be purchased is set at a level between 51% and two-thirds, and the target company maintains its listing after becoming a subsidiary, and then acquires additional shares up to less than two-thirds without a tender offer for various purposes. However, under the current amendment, this exemption was eliminated, and a major shareholder holding more than 30% can buy additional shares without commencing a tender offer only up to “0.5% in 6 months”, as an exception to category (i) above. Since the methods for parent companies to purchase more shares of listed subsidiaries will narrow, there may be fewer cases where the limit of shares to be purchased is set at less than two-thirds in a tender offer to maintain the listing of the target company.
Course Correction to Guidelines for Corporate Takeovers
Because the Guidelines for Corporate Takeovers (“Guidelines”), published by the Japanese government in August 2023, emphasise that desirable acquisitions, whether they are friendly or hostile to the management of the target companies, will increase corporate values, the acquisition of Japanese listed companies without the consent of their management has no longer been considered a taboo. The Guidelines articulate that “corporate value” is a quantitative concept and further assert that the management of the target company should not make the concept of corporate value unclear by emphasising qualitative value, which is difficult to measure, nor should the “corporate value” concept be used as a tool for management to defend themselves. The Guidelines also warn that when the management of the target company endorses a proposal considered conducive to enhancing corporate value but insufficiently priced, such endorsement should be exceptional, and the board of directors should fully explain the reasonableness of its decision. As a result, it has been understood that an acquisition offer without consent cannot be easily rejected if the proposed price is significantly higher than the stock price in the market or the tender offer price agreed upon between the target company and a friendly bidder.
A committee under the Ministry of Economy, Trade and Industry (METI) is currently discussing ancillary documents or FAQs of the Guidelines on the assumption that the Guidelines have been misunderstood and too much emphasis has been placed on shareholders’ interests. Whether or not METI’s assessment is proper, the new documents are likely to allow the directors of a target company to endorse a lower-priced proposal or remain standalone when such a choice would reasonably increase corporate value, and to reject a higher-priced proposal that would, in their good-faith belief, deteriorate corporate value.
The new documents are scheduled to be announced before summer this year. Players in the M&A market should keep an eye on whether this course correction may affect the trend in Japanese deals.