Concerns over Sensitive Tech Leaking Prompt Japanese Government to Take Action against Mbk’s Makino Buyout

By Yui Orita and Masato Takamura / Yomiuri Shimbun Staff Writers

17:03 JST, April 24, 2026

Strong concerns over a possible leak overseas of technology that can be used to produce defense equipment have prompted the government to issue a recommendation to halt the foreign acquisition of a Japanese company for the first time in 18 years.

The government said Thursday that it had recommended that MBK Partners, an Asian investment fund based in Japan, China and South Korea, abandon its planned acquisition of Makino Milling Machine Co., a major machine tool manufacturer.

It is only the second time Japan has issued a recommendation to halt an investment under the Foreign Exchange and Foreign Trade Law.

Wholly owned subsidiary

“[Makino] is one of the world’s leading machine tool manufacturers, and its products are widely used by our country’s defense equipment makers. We considered the nature of the business and other factors comprehensively,” Finance Minister Satsuki Katayama told reporters on Thursday regarding the reasons for the government’s move.

The fact that MBK’s acquisition plan involved making Makino a wholly owned subsidiary by acquiring 100% of shares in the Japanese company was also reportedly a factor in the government’s decision.

Founded in 1937, Makino is one of the world’s leading manufacturers of industrial machine tools. Makino’s flagship product is the machining center series, which performs multiple machining operations such as cutting and drilling holes in metal, including iron and aluminum, via computer control. These machines are used not only for manufacturing parts for civilian products such as automobiles and aircraft, but also for defense equipment.

The company is listed on the Tokyo Stock Exchange’s Prime Market. Its consolidated sales for the fiscal year ending in March 2025 totaled ¥234.2 billion.

MBK seen as white knight

In 2024, Nidec Corp., a major domestic motor manufacturer, announced a tender offer for Makino without prior consultation. In response to this hostile takeover bid, MBK emerged as a potential white knight buyer. Established in March 2005, MBK invests primarily in companies in Japan, China and South Korea with $33 billion (about ¥5.2 trillion) in capital under management.

In June last year, MBK announced its bid to make Makino a wholly owned subsidiary. As machine tools are designated as a specified business type under the law, MBK had submitted a prior notification to the government about its planned acquisition and undergone a review.

The relevant government entities, such as the Finance Ministry, which conducted the review, and the Economy, Trade and Industry Ministry, which oversees the business sector, concluded that the acquisition by MBK poses security concerns and referred the matter to the Council on Customs, Tariff, Foreign Exchange and Other Transactions. Based on the council’s opinion, the government reportedly issued a recommendation to MBK to halt the buyout.

Impact on market

In the Japanese market, mergers and acquisitions have been intensifying partly due to an increase in proposals from investors seeking to improve management efficiency. According to Recof Corp., which provides advice on mergers and acquisitions, there were 5,228 merger and acquisition deals, including those involving investments, by Japanese companies in fiscal 2025. This preliminary figure was an 11% increase from the previous fiscal year, marking a record high.

Given the situation, the government’s recommendation to halt a takeover bid by a white knight has sent shock waves through the relevant parties.

“Foreign companies may feel concerned about investing in Japanese firms and could shy away from doing so. The merger and acquisition market could cool down,” said Takehiro Tsujii, an executive officer at major merger and acquisition brokerage firm M&A Capital Partners Co.

However, the government intends to maintain its stance of upholding the principle of free trade and aiming for economic development through sound investment in Japan.

“There have been only two such cases over a long period of time,” a senior Finance Ministry official said of the recommendation to halt the foreign acquisition.

The government issued a recommendation in 2008 to a British investment fund that had sought to increase its stake in Electric Power Development Co., a wholesale electricity provider, citing the risk that the move could disrupt Japan’s domestic power supply. The fund refused to comply, prompting the government to issue a formal order. The fund ultimately abandoned its plan to buy additional shares.

“While seeking to attract as much free investment as possible, we will take a case-by-case approach to deals that could pose a risk to national security,” said the official.