Foreign Takeover Bids for Japanese Firms Set to Hit Record: Assessing Japan’s Evolving Corporate Governance and Its Impact on Foreign Investor Opportunities

Japan’s corporate landscape is undergoing a seismic shift, driven by a confluence of regulatory reforms, currency dynamics, and a reorientation toward shareholder value. Foreign takeover bids for Japanese firms are poised to set a new record in 2025, with the number of proposals and deal values surging to unprecedented levels. This transformation is not merely a function of market cycles but a direct consequence of deliberate policy changes that have recalibrated the rules of corporate governance in Japan.

According to a report by Bloomberg, Japan is on track to surpass its previous record of 193 foreign takeover bids in 2023, with 157 proposals already announced by August 2024 [1]. By the first half of 2025, this figure had escalated further, with over 2,219 inbound and domestic deals totaling $232 billion in value—a stark contrast to the $137.1 billion recorded in the same period in 2024 [1]. The catalysts are clear: a weak yen has made Japanese assets more affordable, while regulatory reforms have dismantled long-standing barriers to foreign ownership.

At the heart of this shift are corporate governance reforms spearheaded by Japan’s Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock Exchange (TSE). These reforms, introduced between 2023 and 2025, mandate that Japanese companies give “sincere consideration” to credible takeover proposals and conduct market assessments for potential bidders [1]. The TSE’s “Action to Implement Management that is Conscious of Cost of Capital and Stock Price” initiative has further pressured firms to justify valuations by pushing stock prices above a price-to-book ratio (PBR) of one—a historically elusive benchmark in Japan [1].

The impact of these changes is evident in the rise of unsolicited takeover offers and shareholder activism. For instance, Bain Capital and KKR engaged in a high-stakes battle for Fujisoft, with KKR ultimately securing support from major shareholders [3]. Similarly, the landmark $47 billion bid by Alimentation Couche-Tard for Seven & i Holdings—owner of the 7-Eleven chain—has underscored how foreign investors are increasingly targeting Japanese firms with undervalued assets and international brand recognition [5]. While this bid remains unresolved, it has catalyzed a broader conversation about Japan’s traditionally insular corporate culture and its readiness to embrace external strategies for growth.

Private equity firms and activist investors have also capitalized on the new environment. By mid-2025, private equity deal values in Japan had surged from $8.7 billion in H1 2024 to $38.2 billion in H1 2025, driven by take-private deals and governance-driven divestitures [1]. Companies like Daiichi-Sankyo and Toppan have restructured their operations to align with these reforms, focusing on core competencies and shareholder returns through share buybacks and dividend increases [1].

However, challenges persist. Cultural resistance to foreign ownership remains, as seen in the abandoned $46 billion bid for Seven & i Holdings by Alimentation Couche-Tard in 2024 [1]. Additionally, while the Foreign Exchange and Foreign Trade Act has been used sparingly to block acquisitions, the government’s hands-off approach may not always align with the interests of domestic stakeholders.

For foreign investors, the opportunities are clear. Japan’s corporate reforms have unlocked access to a $232 billion M&A market in 2025 alone, with sectors like industrial automation, semiconductors, and battery technology offering strategic value [1]. The unwinding of cross-shareholding structures—a historical shield against takeovers—has further amplified the potential for consolidation and value creation [2].

Yet, success in this market requires nuance. As JPMorgan notes, Japan’s M&A boom is “here to stay” but demands a deep understanding of local dynamics, including regulatory nuances and cultural sensitivities [1]. The case of Nidec Corporation’s 2023 unsolicited acquisition of Takisawa Machine Tool Co. illustrates both the possibilities and pitfalls: it was the first application of METI’s revised takeover guidelines and set a precedent for foreign-led bids [4].

In conclusion, Japan’s evolving corporate governance framework has transformed it into a global M&A hotspot. While risks remain, the alignment of policy, market forces, and investor appetite positions Japan as a critical destination for foreign capital in 2025 and beyond. As one analyst put it, “The Land of the Rising Sun is now the Land of the Rising Deal” [5].

Source:
[1] Japan Set for Record Number of Takeover Offers by Foreign Firms [https://www.bloomberg.com/news/articles/2025-09-08/japan-set-for-record-number-of-takeover-offers-by-foreign-firms]
[2] Shareholder Activism in Asia Reaches Record High, Driving Corporate Governance Reforms [https://www.businesswire.com/news/home/20250526191831/en/Shareholder-Activism-in-Asia-Reaches-Record-High-Driving-Corporate-Governance-Reforms-According-to-Diligent]
[3] Japanese Stock Market: Takeover Bids Reach Highest Level Since 2007 [https://www.nikkei.co.jp/nikkeiinfo/en/global_services/quick/japanese-stock-market-takeover-bids-reach-highest-level-since-2007-and-acquisitions-without-consent-.html]
[4] A Pioneering Unsolicited Takeover in Japan: Nidec’s 2023 Acquisition of Takisawa [https://xbma.org/japanese-update-a-pioneering-unsolicited-takeover-in-japan-nidecs-2023-acquisition-of-takisawa/]
[5] Convenience Store Takeover: Does 7-Eleven Bid Herald an Unprecedented Wave of M&A in Japan? [https://www.imd.org/ibyimd/strategy/convenience-store-takeover-does-7-eleven-bid-herald-an-unprecedented-wave-of-ma-in-japan/]