Japan has overtaken China in the first quarter of 2009 as the most active country in the Asia-Pacific region for the first time in five years. Japanese M&A accounts for 28% of the number of Asia-Pacific deals, while Chinese activity makes up 25%, according to mergermarket, the independent M&A intelligence provider.

The mergermarket Japan M&A round up Q1 2009 reports that in the face of imminent recession, Japan uniquely shows a steady deal flow in the M&A market. In the first quarter of 2009, Japan has seen the announcement of 109 deals, 65% more than the previous quarter. While there have been no mega- deals in the year to date to drive up the total value of Japanese M&A, the mid-market (deals valued between US$10m and US$250m) has increased both in value and in volume and retained pre-crisis levels of activity.

After a significant increase in 2008, outbound deals have gone down both in value and in volume. While there were a few large acquisitions in this quarter such as Kirin's transaction with San Miguel, its scale does not compare with Mitsubishi UFJ's acquisition of partial stake in Morgan Stanley or Takeda's acquisition of Millennium Pharmaceuticals in 2008. Although most of them are smaller in size than last year, Australasia and South East Asia made up a large portion as the target geography of Japanese outbound M&A this quarter, instead of the US or European nations. With inbound deals also limited in number, the data shows that most of transactions in Q1 2009 took place between domestic companies.

Nomura Holdings already the biggest financial advisor in Japan, has expanded its role beyond the domestic market. With the acquisition of Lehman Brothers' European and Asia-Pacific operations last year, Nomura's presence has increased significantly overseas. Not only has it again swept all the top spots for Japanese league tables in Q1 2009, Nomura also ranks among the top 20 financial advisors in the global league tables.