Key facts
- Japanese companies divested 8.89 trillion yen ($56.2 billion) in cross-shareholdings in the fiscal year ended March.
- This divestment marks the second-highest amount on record.
- Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group will sell their Toyota shareholdings over several years.
- The banks' divestment of Toyota shares is valued at ¥1.32 trillion ($8.5 billion).
- Japan-related M&A reached JPY 51 trillion ($314 billion) in 2025, a 112% increase from the previous year.
Japanese listed companies divested 8.89 trillion yen ($56.2 billion) in cross-shareholdings in the fiscal year ended March, marking the second-highest amount on record. This trend reflects a broader shift in corporate Japan towards improving asset performance and capital efficiency, spurred by new governance codes and exchange listing requirements.
Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group are set to divest their ¥1.32 trillion ($8.5 billion) stake in Toyota over several years. This move, coordinated with Toyota's share buyback program, is seen as a significant step in unwinding the vast network of cross-held shares that have long characterized Japanese business relationships.
Cross-shareholdings, which once symbolized corporate loyalty and stability, have fallen from 50% of total market capitalization in 1990 to about 11% today. The unwinding is driven by a decade-old push for greater transparency and shareholder returns, accelerated by the Tokyo Stock Exchange's market restructuring and pressure on companies with price-to-book ratios below 1.0.
Japan-related M&A activity surged 112% to JPY 51 trillion ($314 billion) in 2025, with proceeds from divestments being used to diversify into growth sectors. This transition from relationship-based to performance-driven governance is creating a more dynamic M&A market, drawing comparisons to the US in the 1980s.