Why Japanese medium-sized companies are becoming more popular as foreign capital attracts acquisitions: Technology and market share are not the only motivations for acquisitions | Special feature | Toyo Keizai Online

America’s KKR continues to acquire mid-sized Japanese companies (Photo: Reuters/Kyodo)

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An increasing number of foreign companies and investors are interested in acquiring mid-sized Japanese companies.

Kunihiro Kore-eda, CEO of the Chinese subsidiary of Corporate Direction, a management consulting company, says, “Inquiries from Chinese companies that want to develop the Japanese market are rapidly increasing.Many people are also expressing interest in acquiring small to medium-sized Japanese companies.”

Japan is the world’s fourth largest economy and has the world’s 12th largest population. The market size is large, and there are many overseas companies that place emphasis on Japan.

Just under 60% have PBR less than 1x

The technological capabilities and market share of Japanese mid-sized companies are also attracting attention. In 2022, the Crosby Group, which is a subsidiary of the American investment fund Kohlberg Kravis Roberts (KKR) and manufactures hanging equipment for cranes, made a TOB (takeover offer) for Kito, a mid-sized Japanese company. The two companies merged their operations the following year.