By Kaname Sugimoto

Yomiuri Shimbun Staff Writer

A record high number of mergers and acquisitions involving Japanese companies took place in fiscal 2025, which ended in March 2026. The total M&A value also surpassed the previous record.

One notable trend was the purchase of low-profit business segments other companies were selling off in response to growing demands from investors to improve business efficiency.

Outlook on the global economy has become increasingly uncertain amid the escalation of the Middle East conflict. However, Japanese companies may accelerate moves to sharpen strategic focus on core competencies and divest low-profit business segments, which could further increase M&A in Japan.

According to M&A advisory firm Recof Corp., the number of M&A deals -- including equity investments -- involving Japanese companies as either buyers or sellers reached 5,228 in fiscal 2025, up 11% year-on-year. It marked the second consecutive year with record highs since the company began tracking data in fiscal 1985. As many large-scale acquisitions took place in fiscal 2025, the total value of M&A also hit its highest in seven years at 42.9 trillion yen, up 88% from the previous fiscal year.

Selling business segments in response to market demand occurred prominently. In December, Sapporo Holdings Ltd. decided to sell its real estate business, including the Yebisu Garden Place commercial complex in Tokyo, to a consortium of overseas investment funds. This decision was prompted after its largest shareholder -- a Singapore-based investment fund -- raised concerns about the low profitability of Sapporo's mainstay alcohol business. The fund demanded Sapporo divest the real estate segment, claiming that the segment had bred complacency in the company.

Panasonic Holdings Corp. has sold its housing equipment subsidiary to YKK Corp. to transform its business structure. The company had placed the subsidiary as a low-profit business segment.

M&A for growth

For some companies, M&A are a means to achieve business growth.

NEC Corp. will acquire a U.S. software company that provides customer management support systems in order to expand operations in America. It will pay about 440 billion yen for the acquisition, the highest in its history. Sumitomo Forestry Co. will purchase a major U.S. home builder for about 650 billion yen as part of efforts to expand its single-family home business in the United States.

Conversely, moves by Toyota group and Hisamitsu Pharmaceutical Co. were driven by the intent to prevent hostile takeovers and increase growth investments in the long-term.

The Toyota group, led by Toyota Motor Corp., successfully made a tender offer for Toyota Industries Corp. -- the group's foundational firm -- worth 5.9 trillion yen through mid-March with an aim to take the company private. In February, Hisamitsu Pharmaceutical announced the completion of a management buyout.

Unflagging incentive

One reason behind the increase in M&A is demand from the government and the stock market for listed firms to invest more in growth.

The Financial Services Agency and the Tokyo Stock Exchange plan to revise the Corporate Governance Code as early as this summer. It is expected companies will be asked to show how management resources are allocated, in response to market concerns of growth investments being neglected in favor of hoarding cash or diverting funds toward short-term shareholder returns.

The increasing number of small and medium-sized enterprises being sold due to a lack of successors is also a contributing factor in the rise of M&A.

The escalating conflict in the Middle East may further enhance economic uncertainty in fiscal 2026. Interest rates may continue to rise, which could also make it difficult for companies to secure the funds necessary for M&A. On the other hand, it is also likely that falling stock prices will be regarded as an opportunity for M&A. Companies moving to sell business segments before their performances deteriorate is also expected.

"Companies' appetites (to be involved in M&A) have not waned, both for selling and buying," said Takehiro Tsujii, a senior official of M&A Capital Partners Co., a major M&A brokerage firm.

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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April 09, 2026 00:35 ET (04:35 GMT)

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