JETRO Invest Japan Report 2024
Chapter2. Trends in Inward FDI to Japan Section5: Trends in Inbound M&A in Japan

1. Number of M&A Deals and Top 5 Countries and Regions

Number of M&A deals in Japan declined slightly, with a marked decrease in deals from Asia.

In 2023, the number of cross-border M&A deals in Japan (hereafter "inbound M&A deals") was 147 (on a completion date basis), down 6.4% from the previous year. The number of inward M&A deals in Japan has been declining since 2021. In 2023, world direct investment declined for the second consecutive year, and cross-border M&A hit a record low in 10 years. Thus, Japan may have also been affected by this.

Looking at the number of inbound M&A deals in 2023 by investor country, the United States was the largest with 52 deals (35.4% of the total), followed by Hong Kong (16 deals, 10.9%), and Singapore (15 deals, 10.2%). The United Kingdom, which had six deals in 2022, ranked fourth with 11 deals, while China, which ranked third with 16 deals in 2022, came in fifth with 10 deals.

Created as of July 1, 2024 using the database Workspace. Displays the number of M&As with Japan on a calendar year basis from 2000 to 2023. The trends in the number of cases are as follows: 170 cases in 2000, 125 cases in 2001, 119 cases in 2002, 122 cases in 2003, 137 cases in 2004, 136 cases in 2005, 139 cases in 2006, 223 cases in 2007, 194 cases in 2008, 143 cases in 2009, 179 cases in 2010 , 115 cases in 2011, 140 cases in 2012,140 cases in 2013, 92 cases in 2014, 143 cases in 2015, 141 cases in 2016, 104 cases in 2017, 986 cases in 2018, 127 cases in 2019, 145 cases in　2020, 180 cases in 2021, 157 cases in 2022, 147 cases in 2023. The highest number of cases during this period was 223 cases in 2007, and the lowest number was 92 cases in 2013. — Chart 2-17: Trends in Inbound M&A Deals in Japan

Source:

Based on "Workspace" by Refinitiv

Chart 2-18: Number of Inbound M&A Deals in Japan in 2023 (by investor country and region) (#of projects, %)
Ranking	Country/ Region	# of Projects	Growth rate(YoY)	Share
1	United States	52	-3.7	35.4
2	Hong Kong	16	-15.8	10.9
3	Singapore	15	87.5	10.2
4	United Kingdom	11	83.3	7.5
5	China	10	-37.5	6.8
—	Total	147	-6.4	100.0

Source:

Based on "Workspace" by Refinitiv

2. Major Inbound M&A Deals in Japan from January 2023 to September 2024

Management buyout (MBO) deals stand out

Among the major inbound M&A deals during the above period, there were a number of cases of management buyouts (MBO) in which, with the support of investment funds, the target company's management team purchased its own shares from shareholders through a takeover bid (TOB) in order to review management or delist the company from the stock exchange. These include the "Outsourcing" deal by U.S. investment fund Bain Capital, the "Benesse Holdings" deal by Swedish private equity investment firm EQT, and the "Nihon Housing" deal by U.S. investment fund Goldman Sachs. There were also some friendly M&A deals in which the acquired company expressed its support for the TOB. These include the "Uzabase" deal and the "Iwasaki Electric" deal by U.S. investment fund Carlyle, and the "T&K TOKA" deal by U.S. investment fund Bain Capital.

Chart 2-19 Major Inbound M&A Deals in Japan from January 2023 to September 2024
Completion	Target Company	Sector	Acquiring company (Substantial acquiring entity *Note 2)	Country/ region of the acquiring company's ultimate parent company	Sector	Outline	Values (million U.S.$)
February 2023	Hitachi Transport System	Manufacturing Industry	HTSK (KKR)	U.S.	Finance	U.S. investment firm KKR acquired Hitachi Transport System through a special-purpose company HTSK and others, and Hitachi Transport System has changed its name to LOGISTEED. The company aims to promote the logistics outsourcing business in a strategic partnership with Hitachi, Ltd., the parent company of the former Hitachi Transport System.	5,985
April 2023	Evident	Healthcare	BCJ-66 (Bain Capital)	U.S.	Finance	Olympus transferred all shares of its wholly owned subsidiary Evident, which is involved in the scientific business such as biological microscopes and industrial endoscopes, to BCJ-66 led by U.S. investment fund Bain Capital. The scientific business, which has different business characteristics from the medical field, will be taken over by Evident, and the two companies each will establish management structures suited to their respective characteristics.	3,110
June 2024	Outsourcing	Service	BCJ-78 (Bain Capital)	U.S.	Finance	TOB deal for MBO purposes by BCJ-78 led by Bain Capital, a U.S. investment fund. Outsourcing, which provides temporary staffing services to manufacturers and other companies in Japan and overseas, is finding management difficulties due to business expansion through aggressive M&A. By utilizing Bain Capital's management resources, the company says that they will be able to accelerate the drastic restructuring of its internal control system and global governance structure.	2,223
May 2024	Benesse Holdings	Service	Bloom 1 (EQT)	Sweden	Finance	Bloom 1, an acquisition company established by Swedish private equity fund EQT, conducted a TOB of Benesse Holdings shares to take the company private as part of an MBO. Benesse Holdings plans to flexibly and steadily implement measures such as increasing operational efficiency through digitalization and diversifying services in the education business by allocating management resources to the group through EQT.	1,263
February 2024	Sogo Medical Group	Service	SO1 Holdings (A corporation funded by a fund advised by CVC Capital Partners for investment)	United Kingdom (Island of Jersey)	Finance	SO1 Holdings, a corporation funded by a fund advised in investment by CVC Capital Partners, a European investment fund, acquired Sogo Medical Group, a major dispensing pharmacy company (already taken private in 2020).	1,198
March 2023	Hotels & leisure facilities owned by Prince Hotels (26 assets in total)	Real Estate	Reco Sky (GIC)	Singapore	Finance	As part of efforts to strengthen the financial and business structure of the Seibu Holdings Group, Prince Hotels, a consolidated subsidiary of the Group, transferred 26 assets including its owned hotels to Reco Sky, an affiliate of the Singapore government investment fund GIC. The transfer price of the assets was 123.7 billion yen.	906
January 2023	KITO	Manufacturing Industry	Lifting Holdings BidCo (Fund advised by KKR for investment)	U.S.	Service	TOB deal by Lifting Holdings BidCo, a company established by funds advised by U.S. investment fund KKR and others. It enhances corporate value through synergies from the management integration of KITO, a leading manufacturer of material handling equipment (hoists and cranes), and Crosby Group (U.S.), a leading provider of lifting and rigging solutions. The planned purchase price on an announced basis is 56.5 billion yen.	479
February 2023	Multi-family residential portfolio 33 assets	Real Estate	AXA IM Alts (AXA Investment Managers)	France	Finance	AXA IM Alts, the AXA Group's alternative investment business, has begun acquiring a new residential portfolio in Japan. The seller is an Asia Pacific real estate company affiliated with J.P. Morgan Asset Management of U.S.. The acquisition price announced is approx. 59 billion yen. The properties include 33 buildings located in Tokyo, Nagoya, and Osaka; mainly studio apartments near train stations.	458
March 2023	Royal Hotel (Rihga Royal Hotel Osaka)	Real Estate	Sakura LLC (BentallGreenOak)	Canada	Finance	BentallGreenOak, a group of companies that operates real estate private equity funds under Sun Life Financial, a major Canadian life insurance company group, acquired trust beneficiary rights of land and buildings of Rihga Royal Hotel (Osaka) through a special purpose company (Sakura LLC) established for the acquisition of real estate.	418
July 2023	Daiwa Resort	Real Estate	Ebisu Resort (SC Capital Partners, Abu Dhabi Investment Authority subsidiary, Goldman Sachs Asset Management)	Singapore, United Arab Emirates, United States	Finance	Ebisu Resort, a special purpose company of an international private fund consisting of three companies: Singapore-based real estate developer SC Capital Partners; a subsidiary of Abu Dhabi Investment Authority of the United Arab Emirates; and Goldman Sachs Asset Management of the U.S., has acquired all the shares of Daiwa Resort, a Daiwa House industry's subsidiary that operates and manages hotels and other resort facilities. Daiwa Resort, which operated 24 hotels nationwide, was facing the problem of aging facilities and changes in the environment surrounding the hotel industry, and the added impact of the COVID-19 pandemic finally made it difficult for the company to envision a future growth scenario. Ebisu Resort entrusted the management of its hotel business to Accor, a French company that operates the Grand Mercure and Mercure brands.	407
February 2023	Uzabase	High Technology	THE SHAPER (KKR)	U.S.	Finance	Carlyle Group, a U.S. investment fund, through THE SHAPER acquired all shares of Uzabase through TOB, which runs news apps such as NewsPicks. In the course of discussions with Carlyle, Uzabase decided that, based on the Carlyle's track record, it was the ideal candidate to partner with to drive the company's medium to long term growth in corporate value.	398
June 2024	Nihon Housing	Real Estate	Marcian Holdings (Goldman Sachs)	U.S.	Finance	Goldman Sachs, a U.S. investment fund, conducted a TOB of Nihon Housing's shares as part of an MBO by Marcian Holdings GK, a company established for investment purposes. Nihon Housing expressed its opinion in favor of the TOB and resolved to recommend that Nihon Housing's shareholders apply for the TOB. Through the MBO, the company aims to strengthen the foundations of its existing businesses and enhance its corporate value in the medium to long term.	336
April 2024	Sasaeah Holdings	Healthcare	Virbac	France	Healthcare	ORIX Corporation announced that it had signed an agreement to transfer all shares of Sasaeah Holdings, its animal pharmaceutical subsidiary, to France-based Virbac. Virbac will take a leading position in the industrial animal vaccine market in Japan, particularly in the cattle sector and achieve a broad portfolio in the veterinary medicine market covering all major animal species.	304
October 2023	Qualicaps	Healthcare	Roquette Frères	France	Healthcare	The Mitsubishi Chemical Group has reached an agreement with Roquette Frères SA, a French manufacturer of healthcare-related products, to transfer all shares of Qualicaps, its wholly owned subsidiary that manufactures pharmaceutical capsules, and has signed a share transfer agreement. In 2013, the Mitsubishi Chemical Group acquired Qualicaps to strengthen its pharmaceutical-related business.	302
June 2023	KOKUSAI ELECTRIC	Manufacturing Industry	Qatar Holding (Government of Qatar)	Qatar	Finance	Qatar Investment Authority, a Qatar's sovereign wealth fund, announced that it had acquired shares of KOKUSAI ELECTRIC through its subsidiary Qatar Holding LLC. With this acquisition, Qatar Holding LLC became a minority shareholder with a 4.9% stake in the company. KOKUSAI was established by U.S. investment fund KKR when it acquired Hitachi Kokusai Electric in 2018 and spun off its semiconductor equipment division. The company relisted in October 2023 and aims to increase its corporate value as a manufacturer specialized in semiconductor manufacturing equipment.	298
October 2023	Moritex	High Technology	Cognex	U.S.	Manufacturing Industry	Cognex Corporation, a leading U.S. industrial machine vision company, has acquired Moritex Corporation, a leading provider of optical components for machine vision applications, for approx. 40 billion yen from a fund affiliated with Trustar Capital, the private equity arm of CITIC Capital Holdings (Hong Kong), a subsidiary of Citic Group Corporation in China (CITIC). Machine vision is a technology that processes images captured by cameras and operates equipment based on the processing results. It provides industrial equipment with human vision and the ability to make discriminations with that.	273
September 2023	Real estate portfolio 25 assets	Real Estate	City Developments	Singapore	Real Estate	City Developments, a Singapore-based global real estate company, acquired 25 rental condominium properties in Tokyo (total of 836 units) from BentallGreenOak, a group of companies operating real estate private equity funds under Sun Life Financial, a major Canadian life insurance company group. The total acquisition amount was 35 billion yen. All of the properties are conveniently located within 10 minutes from the nearest station, and the investment was made in anticipation of strong demand for rental housing in the 23 wards of Tokyo.	234
June 2023	Impact Holdings	Media	BCJ-70 (Bain Capital)	U.S.	Finance	BCJ-70, led by a U.S. investment fund, Bain Capital, has implemented an MBO of Impact Holdings, which is primarily engaged in in-store marketing business for the distribution and retail industries, through a TOB. Impact Holdings had published Notice Regarding Implementation of MBO and Recommendation to Tender. In particular, it was determined that it would be beneficial to utilize external management resources to address management challenges such as the risk of losing demand due to intensifying competition in the data marketing field, which has significant room for growth.	210
June 2023	Iwasaki Electric	Manufacturing Industry	Cosmo Holdings (Carlyle)	U.S.	Finance	Cosmo Holdings, established by a fund owned by Carlyle, a U.S. investment fund, conducted TOB of Iwasaki Electric as part of an MBO. Iwasaki Electric published Notice Regarding Implementation of MBO and Recommendation to Tender regarding this TOB, and the TOB was successful. The domestic LED lighting market, which is the company's main product, has been shrinking and its growth is slowing. In order to address management issues in a flexible manner, the company decided that it needed to go private.	207
April 2024	T&K TOKA	Chemicals	BCJ-74 (Bain Capital)	U.S.	Finance	BCJ-74, led by U.S. investment fund Bain Capital, conducted TOB of T&K TOKA, which manufactures and sells various printing inks and synthetic resins for printing, paints, and adhesives, as part of an MBO. For this TOB, T&K TOKA published Notice Regarding Implementation of MBO and Recommendation to Tender, and the TOB was successful. The business environment is becoming increasingly challenging due to the continuing decline in demand for paper-based printed materials as a result of the progress of digitization, and the company intends to carry out fundamental management reforms by taking the company private.	205

Note1:

Major transactions are listed. The nationality of an acquisition company is based on the location of its ultimate parent company.
Note2:

If the tender offeror is an SPC (special purpose company), etc., the substantive acquiring entity is also listed.
Note3:

In order of investment amount based on company announcements or media reports
Source:

Based on "Workspace" by Refinitiv

Column: Diversification of buyers and methods over M&A transactions in Japan

The number of M&A transactions (OUT-IN) in Japan by foreign capital since 2000 has been around 80 in recent years, although there is some variation from year to year^*1. M&A transactions by foreign capital have been greatly influenced by the global and Japanese economic and social environment at the time. The line in the chart shows the percentage of the foreign financial institutions on the acquiring side in the total number of cross-border M&A transactions made in Japan. Due to the impact of the Lehman's collapse in 2008 and other factors, the number of cross-border M&A transactions by foreign investors in Japan also declined in the following some years. The significant increase in the number of transactions in 2014 might be triggered in part by a sense of undervaluation of transaction prices due to the falling Japanese yen against the U.S. dollar, as well as by the formulation of the Corporate Governance Code and Stewardship Code at this time, which improved the investment environment in Japan with an awareness of global standards. The most recent decline in 2023 is thought to be due to global supply chain disruptions and other factors that have restrained M&A investment in Japan.

Until now, foreign investment funds have often been associated with Western investment funds such as Carlyle, Bain, Goldman Sachs, and CVC Capital. Recently, however, Mubadala Investment, a sovereign wealth fund of the United Arab Emirates (UAE), Qatar Investment Authority, a sovereign wealth fund of Qatar, both in the Middle East, and GIC, a sovereign wealth fund of Singapore, have assessed that Japan has a comparative advantage in terms of its supply chain resilience against geopolitical risks and that the investment environment is also well-developed ^*2. In addition, they are showing a positive attitude toward investment in Japan, taking advantage of the current economic environment of a weak yen.

Against this backdrop, traditional investment funds have been devising cross-border M&A transaction methods in Japan with schemes that take into account the needs of the acquiree (e.g., promoting carve-out M&A or providing MBO fund)^*3.

The government's promotion of corporate governance reform and the Tokyo Stock Exchange's announcement of Action to Implement Management that is Conscious of Cost of Capital and Stock Price (March 2024), among other factors, have led companies to formulate effective management strategies and improve profitability over the medium to long term. The use of inbound M&A in Japan may attract even more attention as an option for Japanese companies to solve management issues and accelerate growth.

There are bar graphs and line graphs in the graph of the trends in the number of cross-border M&As in Japan and the acquirer's business structure. The bar graph represents the number of (1) — Chart : Changes in the number of cross-border M&As in Japan and business types of buyers

*1.

The breakdown of the number of M&A transactions consists of "acquisition of majority interest" and "acquisition of residual interest," and does not include "acquisition of minority interest." Note that in "Figure 2-17: Changes in the number of inbound M&As in Japan" in Chapter 2, Section 5 of this report, the number includes "acquisition of minority interest."
*2.

In the above chart, the cumulative number of cases since 2015 in which the final parent company of the acquiring company is located in the Middle East (UAE, Qatar, Saudi Arabia, and Kuwait) is 13, while the number of cases in Singapore is 112.
*3.

"Case Studies relating to the use of inbound M&A transactions" (April 2023) by Ministry of Economy, Trade and Industry
For carve-outs, see Pattern A: Explanation/Characteristics (Sale of subsidiary/transfer of business (carve-out)), PP.16-29.
For MBO, see Pattern C: Explanation/Characteristics (Sale of owner-operated company, acceptance of capital (e.g., business succession etc.)), PP.42-53.
Source:

Based on "Workspace" (as of September 20, 2024) by Refinitiv

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