Japan's M&A Surge: A Perfect Storm

Japan’s economy stands at a crossroads. The country faces a rapidly aging population and slow domestic growth, creating challenges for businesses looking to expand. At the same time, Japan has maintained ultra-low interest rates longer than any other major economy, providing a favorable environment for financing deals. With fewer growth opportunities at home, many companies are turning to inorganic growth — both domestically and cross-border — to remain competitive.

Government initiatives also play a role. For years, Japanese regulators have pushed for corporate governance reforms aimed at increasing efficiency and shareholder value. The Tokyo Stock Exchange’s "value push" has encouraged companies to improve performance and optimize their balance sheets, leading some firms to seek strategic acquisitions or divest underperforming assets. This has fueled consolidation in fragmented sectors and prompted Japanese firms to look beyond domestic borders for new opportunities.

Big deals and strategic moves

While Nippon Steel’s USD 14.9 billion bid to buy U.S. Steel remains unlikely to happen, several recent deals underscore Japan’s aggressive M&A strategy.

Automakers Honda and Nissan explored a potential merger to form a USD 60 billion car manufacturer, reflecting the intense pressure on legacy Japanese carmakers as they face declining market share and rising competition from Chinese electric vehicle manufacturers.

While talks between Japan’s second and third largest car automakers ultimately fell through after 53 days of negotiation, Honda later said it would be willing to reopen takeover talks if Nissan CEO Makoto Uchida steps down.

The retail sector has seen its own high-stakes dealmaking. Seven & i Holdings, the parent company of 7-Eleven, has been at the center of a nine trillion yen (USD 60 billion) buyout battle. With international suitors circling, including Canada's Alimentation Couche-Tard and private equity giants KKR and Apollo Global Management, Seven & i Holdings announced in late February that Bain Capital was the preferred buyer for its intermediate subsidiary York Holdings that operates the Ito-Yokado supermarket chain. Bain reportedly offered a valuation of more than 700 billion yen (USD 4.7 billion) for the assets. The Japanese retail giant strategy is to shed its noncore operations and focus on its 7-Eleven convenience stores business.

Meanwhile, smartphone component supplier Murata Manufacturing CEO Norio Nakajima announced in late February that it is considering acquisitions of more than 100 billion yen (USD 665 million) to drive growth over the next three years. Murata is also planning capital spending of 680 billion yen over the next three years to expand capacity at factories in Japan and Thailand.

The risks of global expansion

Japanese companies have a history of ambitious overseas acquisitions, but past deals have sometimes resulted in overpayment and underperformance. With U.S. assets looking increasingly attractive amid economic uncertainty, Japanese acquirers will need to carefully assess valuations and integration strategies to avoid repeating past mistakes.

Despite these risks, the momentum behind Japanese M&A remains strong. Political factors also play a role, with Japan’s leadership signaling continued capital flows into foreign markets. Combined with structural economic pressures, this suggests Japan’s dealmaking wave is far from over.

Looking ahead

The sustainability of this M&A boom will depend on how well Japanese firms execute post-merger integrations and adapt to shifting market dynamics. Success will require a balance between aggressive expansion and disciplined financial management, ensuring that deals not only drive short-term gains but also support long-term strategic growth.

Japan’s surge in M&A activity reflects a convergence of economic necessity, regulatory reform and global ambition. As corporate and PE dealmakers navigate this evolving landscape, the key question remains: Will these transactions create lasting value, or will history repeat itself? Either way, Japanese companies are making bold moves — and the world is watching.

To learn more about the key factors influencing Q2 2025 global M&A, download SS&C Intralinks Q2 2025 Deal Flow Predictor, our quarterly M&A forecast of global and regional activity for the next six months.