Daiwa Institute of Research: Analysis of Tender Offer Activity in Japan

Norbert Gehrke

20 Jul 2025 — 4 min read

In a report published on July 11, 2025, the Daiwa Institute of Research (DIR) analyzes the significant increase in Tender Offer (TOB) activity in Japan from 2020 to mid-2025, highlighting a new phase in corporate strategy.

1. TOB Activity is Surging to Record Levels

The report's primary finding is the dramatic and accelerating increase in the volume of Tender Offers in Japan. This is not just a minor uptick; it is a fundamental market shift.

The Data: The trend shows consistent growth, rising from 64 TOBs in 2020 to a record 127 in 2024, a 21% increase over 2023.
Accelerating Pace in 2025: The momentum is continuing to build. In the first six months of 2025 alone, 81 TOBs were launched. The report notes this is the "fastest pace ever" recorded, and if this trend continues, 2025 is on track to significantly surpass 2024's record high. This signals that the forces driving TOB activity are strengthening.

2. Two Main Types of TOBs are Growing

The report categorizes TOBs into two distinct types, each serving different strategic purposes and both experiencing growth.

Third-Party TOB (他社株 TOB):
- What it is: The classic M&A tender offer where one company or investor (like a fund) offers to buy the shares of another company.
- Purpose: The goals typically include full acquisition and delisting, turning a company into a subsidiary, or a Management Buyout (MBO).
- Pricing: These offers are almost always made at a premium to the current market price to incentivize shareholders to sell.
- Growth: This is the most common and fastest-growing category, increasing by 24.1% in 2024.
Self-Tender TOB (自社株 TOB):
- What it is: A company offers to buy back its own shares.
- Purpose: This is often a strategic tool used to buy shares from a specific major shareholder, such as another corporation looking to unwind a "cross-shareholding" arrangement. By conducting a TOB, the sale can be done efficiently without depressing the market price. It is also used as a step in complex, multi-stage acquisitions to help the final acquirer reduce its cash outlay.
- Pricing: These offers are typically made at a discount to the market price to ensure that only the targeted shareholder(s) participate, not the general public.
- Growth: This category is also growing (+11.5% in 2024), though not as rapidly as third-party TOBs.

3. Profile of 2024 M&A Deals

A deep dive into the 95 M&A-driven TOBs of 2024 reveals a distinct pattern of who is buying whom and why.

Acquirers: The buyers were dominated by large, TSE Prime-listed companies (42% of cases) and unlisted entities (47% combined), which include private equity funds and special purpose companies created for acquisitions.
Targets: The targets were predominantly smaller firms. 50% were listed on the TSE Standard market, and nearly half of all targets had a market capitalization below ¥100 billion ($670 million USD).
Primary Goal: The overwhelming strategic objective was consolidation and delisting. In 79% of cases, the TOB was intended to take the target company private.
Most Active Sector: The "Information & Communication / Services" industry was the most frequent target by a wide margin, accounting for 37 deals. The report notes this was three times more than any other sector, highlighting intense consolidation and strategic activity in Japan's tech and services industries.

4. 2025 is Marked by Unprecedented Strategic Reorganizations

The TOBs observed in the first half of 2025 are notable not just for their volume, but for their scale and strategic complexity, signaling a new phase of corporate restructuring in Japan.

Large-Scale Group Restructuring: Deals are moving beyond simple acquisitions to full-blown reorganizations of major corporate groups. Key examples cited are NTT's TOB for its subsidiary NTT Data and the major realignment within the Toyota Group, both of which have massive industry-wide implications.
Cross-Industry and Cross-Border Deals: The market is seeing more ambitious deals that transcend traditional boundaries. Examples include:
- Cross-Industry: NTT Docomo's (telecom) offer for SBI Sumishin Net Bank (finance).
- Cross-Border: The bid by Taiwan-based Yageo for Shibaura Electronics, demonstrating growing interest from foreign strategic buyers in Japanese technology assets.
Emergence of Contested Bids: The market is becoming more competitive and less predictable. The report highlights the case of MinebeaMitsumi launching a counter-offer for Shibaura Electronics against Yageo’s bid. This signifies a shift towards a more dynamic M&A environment where target companies are no longer passive.

5. Key Drivers and Future Outlook

The report concludes by identifying the core forces behind this trend and forecasting what comes next.

Key Drivers:
1. Regulatory Pressure: The Tokyo Stock Exchange (TSE) is a major catalyst, strongly pushing its "quality over quantity" agenda. It is urging listed companies to focus on improving corporate value, capital efficiency, and stock performance, making M&A an essential tool to meet these demands.
2. Strategic Necessity: Japanese companies are under intense pressure to restructure their business portfolios, divest non-core assets, consolidate subsidiaries, and acquire new growth engines. TOBs are the primary mechanism for achieving these goals.
3. Supportive Environment: Government policy, particularly METI's 2023 "Guidelines for Corporate Takeovers," has created a more predictable and supportive framework for M&A, encouraging both friendly and hostile bids.
Future Outlook: The report predicts that TOBs will continue to increase. The M&A landscape will become more tense and dynamic, with more listed companies targeting other listed companies. The era of passive management is ending, and the report anticipates a rise in hostile bids, activist involvement, and competitive counter-offers. Companies must now view M&A and TOBs as a permanent part of their strategic toolkit for both "offense (to drive growth) and defense (to protect value)."