M&A involving Japanese companies totaled a record 3,883 transactions in January–September this year, while overseas investors' acquisitions reached ¥6.2 trillion, well above the level in the same period last year. Overseas private equity activity accelerated against the backdrop of the weaker yen, while an increase in carve-outs and tax and regulatory developments also supported transactions.
According to data compiled by Recof Data, M&A involving Japanese companies totaled 3,883 transactions in January–September this year, the highest for the same period since 1985. Acquisitions by overseas investors totaled 326 transactions and ¥6.2 trillion, a substantial increase from the same period last year. The 9-month total has already exceeded last year's full-year result.
US private equity firms were central to the major transactions. Apollo Global Management acquired Nippon Sheet Glass for approximately ¥590 billion and took it private, while KKR agreed to acquire Taiyo Holdings for approximately ¥500 billion. Warburg Pincus will acquire J.S.B. for approximately ¥200 billion.
Competition intensified in the battle to acquire Kakaku.com. When European private equity firm EQT launched a tender offer, LY Corporation presented a competing proposal with Bain Capital, and the acquisition price continued to rise. Overseas private equity firms are also securing funds for additional acquisitions. EQT established an Asia-Pacific fund of approximately $15.6 billion and expects to allocate funds to Japan. Bain Capital has also indicated plans to expand its investment in Japan.
The weaker yen is considered the most direct background factor, increasing the purchasing power of dollar-denominated funds and reducing the acquisition burden. The dollar-yen level above ¥163 in July represented the weakest yen in approximately 40 years.
Government policy development and moves involving taxation and business restructuring also contributed to the increase in transaction activity. Factors such as the rise in carve-outs, the spread of guidelines on corporate acquisitions and changes to the minimum tax scheduled for next year are encouraging companies to complete transactions within the year.