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

m{a2smporb}ch8)moal1enqw_media_dl_1.png Bloomberg

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(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.

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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.

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These huge transactions have helped to give Japan one of its biggest quarterly hauls on record for deals, data compiled by Bloomberg show.

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“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.

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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.

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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.  

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Transformative Times

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“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.

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“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.

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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.

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“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.”

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Potential Risks

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Japan 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.  

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“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.