Megadeals Like Toyota’s Set Japan on Course for Record M&A Run

Last year’s deals boom put Japan on the priority list for bankers and investors, and momentum toward the end of the first quarter suggests 2026 could go a step better, even with the crisis in the Middle East.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Last year’s deals boom put Japan on the priority list for bankers and investors, and momentum toward the end of the first quarter suggests 2026 could go a step better, even with the crisis in the Middle East.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.Leading the charge, the Toyota group has reached an agreement with Elliot Investment Management — after a standoff — to privatize Toyota Industries Corp. in a transaction valuing the company at $43 billion. That’s the biggest acquisition ever of a Japanese firm. Then there’s Tokyo-based SoftBank Group Corp., which has committed $30 billion to OpenAI’s $110 billion fundraising.These huge transactions have helped to give Japan one of its biggest quarterly hauls on record for deals, data compiled by Bloomberg show.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.“Japan is one of the most exciting and interesting markets globally right now and it will continue,” said Jan Metzger, co-head Asia Pacific investment banking at Citigroup Inc.Reforms to improve corporate governance and shareholder returns have encouraged inbound merger and acquisition activity, while Japanese companies also seek opportunities overseas. Private equity-led transactions and activism are on the rise, along with corporate carve-outs and take-private deals.Given the rise in transactions, Japan’s main banking lobby plans to establish risk management guidelines for lenders offering leveraged loans for M&A deals, according to people familiar with the matter. Transformative Times“Corporate Japan is transforming and the active inbound and outbound M&A markets, both in public and private M&A, are compelling evidence of that change,” said Tracy Whiriskey, a partner and global co-head of insurance at law firm Linklaters.“These factors are converging to unlock transactions that would have been inconceivable a decade ago — creating the conditions for a genuinely transformative year in Japanese M&A,” Tokyo-based Whiriskey said.Recent acquisitions by founding families and group companies, not least Toyota, have also increased, said Masakazu Hosomizu, chief investment officer at US activist fund Sapphireterra Capital.“While buyers previously held pricing power, activist voices have led to price revisions, resulting in more transactions being conducted at fair prices,” he said. “This also contributes to pushing up the total value of Japan-related acquisitions.”Potential RisksJapan is showing resilience even as sentiment globally is threatened by events such as the conflict in the Middle East, a selloff in technology stocks and private credit jitters. “While assessing geopolitical risks in the Middle East is necessary, the positive trend for Japanese companies’ cross-border deals should persist if the impact remains contained,” said Akifusa Takada, managing partner at Baker & McKenzie in Tokyo.Ellis Chu, head of Asia M&A at Jefferies Financial Group Inc., added that Japan continues to deliver large transactions. Last week, Denso Corp. proposed buying Rohm Co., leading to a surge in the chip-parts maker’s shares. In February, SiTime Corp. agreed to buy Renesas Electronics Corp.’s timing unit in a transaction valued at about $2.9 billion, while Mitsubishi Corp. is purchasing Aethon Energy Management LLC’s US gas and pipeline assets for $5.2 billion, the biggest acquisition by a Japanese company in the American shale sector. Asset disposals by HSBC Holdings Plc in Singapore and Indonesia are attracting insurers in Japan, and Hitachi Ltd. is said to be soliciting bids for its data-storage business, while Toshiba Corp. is said to be considering reducing its stake in its elevator unit amid interest from Finland’s Kone Oyj.

Sony Group Corp. is also spinning off control of its home entertainment business to Chinese rival TCL Electronics Holdings Ltd. “The recent jump in Japan M&A activity is not a one‑off spike, but rather a broad systemic change,” Chu said. “Boards are under real pressure to address capital efficiency, and that’s translating into a groundswell of carve‑outs, take‑privates and subsidiary buyouts at a pace I haven’t seen before.” (Updates with Japan banking lobby guidelines in sixth paragraph.)Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.