Japan: A Corporate/M&A: Domestic Overview
Japan M&A Market Overview 2025
In 2025, Japan’s M&A market experienced a pronounced expansion, with both transaction volume and deal value reaching record levels. According to data published by RECOFDATA, a leading Japanese M&A research provider, the market demonstrated strong momentum across domestic, inbound and outbound transactions, reflecting ongoing corporate restructuring within Japan and sustained interest from global investors.
The total number of M&A transactions involving Japanese companies reached 5,115 deals, representing an 8.8% increase year on year. More significantly, aggregate deal value increased by 74.7%, from approximately JPY20.5 trillion in 2024 to approximately JPY35.7 trillion in 2025, surpassing the previous peak recorded in 2018. This sharp increase in deal value was driven primarily by a concentration of large-scale transactions, particularly in cross-border deals.
Domestic transactions continued to underpin the market in terms of deal volume. Transactions between Japanese companies accounted for over 4,000 deals and reflected continued efforts by corporates to streamline group structures, divest non-core businesses and enhance capital efficiency. Alongside this domestic activity, cross-border M&A played a critical role in driving overall deal value. While the number of outbound transactions declined slightly compared with the previous year, their aggregate value increased sharply, rising by 87.2%, from approximately JPY9.7 trillion to approximately JPY18.2 trillion in 2025. Inbound transactions also expanded, with both deal count and value reaching record levels, underscoring the continued attractiveness of Japanese assets to foreign acquirers.
Outbound M&A activity in 2025 was heavily concentrated in North America, which accounted for approximately two thirds of total outbound deal value. Japanese corporates continued to pursue overseas growth through acquisitions and strategic investments, particularly in technology-related sectors, digital infrastructure, insurance and financial services. Several of the year’s largest transactions involved US-based targets, reflecting the continued strategic importance of the US market for Japanese companies seeking scale, advanced capabilities and long-term growth opportunities.
The Japanese market in 2025 was also notable for the increased visibility of unsolicited transactions. Following the Ministry of Economy, Trade and Industry’s issuance of the “Guidelines for Corporate Takeovers” in 2023, market practice has gradually shifted toward greater acceptance of acquisition proposals initiated without prior board approval. In 2025, seven unsolicited tender offers were launched, compared with four in the previous year. Notably, the tender offer by Taiwan-based electronic components manufacturer YAGEO for Shibaura Electronics ultimately succeeded in October 2025 after a competitive bidding process, despite initial resistance and the emergence of competing bidders. While such transactions remain a small portion of overall deal activity, their growing presence suggests a gradual shift in market expectations, with greater focus on shareholder value, board accountability and procedural fairness in takeover situations.
Activist investor involvement remained elevated throughout the year. Activist-related transactions stayed at levels comparable to 2024, particularly among companies listed on the Prime Market. In parallel, management buyouts and going-private transactions increased, reflecting continued pressure on listed companies to reassess business portfolios, governance structures and long-term strategic positioning in light of capital market expectations. Against this backdrop, private equity deal activity remained robust. A notable example was EQT’s announcement in July 2025 of a USD2.7 billion tender offer for Fujitec, a Japanese elevator manufacturer, following prolonged governance disputes involving activist shareholders and the company’s founding family.
Amendments to the Tender Offer Regulations and the Large Shareholding Reporting Regulations
On 4 July 2025, the Financial Services Agency of Japan (FSA) promulgated the amended Cabinet Order and amended Cabinet Office Ordinances (the “Amended Government Ordinances”) in connection with the amendments to the Financial Instruments and Exchange Act of Japan (FIEA), enacted on 15 May 2024. The Amended Government Ordinances introduce significant changes to the tender offer regulations and the large shareholding reporting regulations. The 2024 amendments are expected to have a substantial impact on M&A transactions in Japan, and the Amended Government Ordinances clarify the overall framework of the revised regime. The amended rules are scheduled to come into effect on 1 May 2026.
Under the amended FIEA, the threshold triggering a mandatory tender offer has been lowered from “more than one third” to “more than 30%,” and on-market purchases have been brought within the scope of the tender offer regulations (while the existing 5% rule applicable to certain off-market purchases has been maintained). The Amended Government Ordinances further specify how these revised rules apply in practice.
The Amended Government Ordinances reorganise and clarify the scope of transactions exempt from the tender offer regulations. The special provision under the former regime permitting additional acquisitions within a specified range by a shareholder holding more than 50% has been abolished. By contrast, the details of the newly introduced “minor acquisitions” exemption have been specified. Where an acquiror already holds more than 30% of the shares of an issuer, a subsequent acquisition will be exempt if, among other conditions, the resulting increase in shareholding is less than 0.5% and no purchases other than by way of a tender offer have been made during the preceding six months. Clarifying these requirements enhances predictability for market participants.
The definitions of “purchase” and “ownership” have also been revised, including transactions involving indirect acquisitions. Even where a transaction does not involve a direct share acquisition, the tender offer rules may apply depending on its substance – for example, where the purpose is exclusively to direct the exercise of voting rights attached to shares of an issuer.
Substantive amendments include an expansion of the grounds for withdrawal of a tender offer. Procedurally, certain flexibility has also been introduced. Subject to regulatory approval, certain shares may be excluded from the obligation to purchase all tendered shares, and extensions of the statutory tender offer period may be rendered unnecessary in specified cases. Disclosure requirements for tender offer registration statements and related documents have also been expanded, enhancing transparency in tender offer transactions.
The Amended Government Ordinances also establish detailed provisions to improve transparency in share ownership.
To promote collaborative engagement, the amended FIEA provides that financial investors who agree to exercise shareholder rights jointly will not be deemed joint holders under certain conditions. The Amended Government Ordinances clarify the permissible scope of such agreements, and the FSA’s Q&A further elaborates on these requirements.
The FSA’s Q&A also clarifies the scope of “material proposal acts”. Such acts must be described in detail in large shareholding reports, and disclosure is also required where a reporting person plans to undertake them. In addition, disclosure will be required under certain conditions when a decision has been made to acquire 5% or more of the shares of an issuer or when such acquisition is planned. These measures enhance transparency regarding material proposal acts and additional share acquisitions.
To address the so-called “wolf pack” issue, the Amended Government Ordinances expand the circumstances in which persons will be deemed joint holders based on objective criteria, including cases where representatives are shared or share acquisitions are requested by a fund provider.
In summary, while the amended FIEA established the overall direction of the reforms, the Amended Government Ordinances clarify the detailed operation of the new tender offer and large shareholding reporting regimes. Market participants engaging in share acquisitions or investment activities involving Japanese listed companies should carefully assess the impact of these amendments and take appropriate measures in response.