Japan M&A blazes trail as global deals decline
By Makiko Yamazaki and Kane Wu
TOKYO/HONG KONG (Reuters) — Japan's M&A market is standing out against a worldwide decline this year, thanks to surging domestic deals as rising costs, stricter governance rules and shareholder pressure force companies to explore strategic options.
Total value of M&A transactions involving Japanese companies grew 14% year-on-year to $111 billion for the first nine months of 2023, making the country the only major market in the world that recorded growth, according to data compiled by LSEG.
The momentum is expected to continue in the near-term as prospects of more corporate restructuring, carve-outs and management buyouts make it a favoured hunting ground for global private equity.
«The Japanese stock market is performing quite well and this type of favourable environment encourages the founders, and those with concentrated ownership to consider selling,» said Bain Capital Asia managing partner David Gross-Loh.
«In the next 6-12 months, there are easily several billion dollars worth of deal opportunities that are in our pipeline,» including a couple of billion-dollar-plus take-private situations, he said.
Domestic deals, including private equity buyouts of Toshiba (OTC:TOSYY) and JSR that totalled over $20 billion, surged 67% to be the major driver, reversing the traditional outbound acquisition model for growth, LSEG data showed.
Bankers said pressure for listed firms has been higher than ever since the Tokyo bourse made a rare call to show plans for better capital efficiency, in an effective vote of confidence for activist shareholders agitating for changes.
The top two deals this year, Toshiba Corp and JSR Corp, had activists on their rosters.
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