A battle between private equity firms EQT and Bain to acquire a $5 billion Japanese internet company illustrates how takeovers in Japan are becoming increasingly contested, with the participation of strategic buyers helping push up prices.

EQT bid for Kakaku.com in May, only for Bain to team up with SoftBank Group subsidiary LY Corp and submit a rival offer. That sparked a six-month bidding war in which EQT has hiked its offer price seven times to try to secure the support of Kakaku shareholders.

It is the highest-profile takeover battle since KKR fended off Bain last year to buy Fuji Soft in a deal valuing the software firm at $4.1 billion, as private equity firms face off in a country relatively unused to contentious takeover battles.

As more funds are taking more companies private, prospective buyers are factoring in the risk of battles and rising prices, dealmakers said. The trend of private equity firms working with non-financial firms, like Bain and LY, is also pushing up prices, they said.

Financial sponsor-backed M&A deals in Japan totalled $24 billion in January-September, just shy of a year earlier but almost double the $13 billion in the same period of 2024, LSEG data showed.

Other contested deals include CVC and KKR’s bid for cosmetics firm Mandom, and on Tuesday the Nikkei reported that Advantage Partners has countered Integral 5842.T with a bid for Kadoya Sesame Mills.

In the battle for Kakaku, EQT extended its offer period for the 10th time on Wednesday, with the deadline for shareholders to tender at the latest price of 3,683 yen ($23) a share on November 12.

Bain and LY raised their offer to 3,700 yen on Monday, rising to 3,720 if they secure the support of Kakaku’s third-largest shareholder KDDI.

Kakaku’s shares ended trading at 3,747 yen on Wednesday, indicating that market participants think further price hikes are possible.

Strategic companies see synergy Companies operating in the same sector as buyout targets may see more growth potential in the targets than funds acting alone so the idea of bidding together is gaining traction, said Yusuke Watanabe, a partner at private equity firm Carlyle. This trend is likely to push up the price of final bids, he said.

LY, which operates the Line messaging app and Yahoo Japan internet portal, considered bidding for Kakaku in recent years, a person familiar with the matter said.

When the media reported EQT’s interest in April, LY decided to join Bain and make a counteroffer, the person said, declining to be identified as deliberations were private.

LY has said it sees synergies between its internet businesses and Kakaku’s price comparison website Kakaku.com and restaurant review website Tabelog.com.

Such synergies include referring customers to LY’s online services and integrating them into the payments ecosystem of SoftBank’s digital wallet PayPay.

In a similar case last month, telecommunications firm Hikari Tsushin 9435.T joined forces with private equity firm MBK Partners and NEC Capital Solutions 8793.T to buy Leopalace21 8848.T, aiming to provide internet, gas and electricity to Leopalace’s managed rental properties.

Bringing in a strategic buyer also offers an exit option when funds struggle to offload investments, said Gregory Salathé, a partner at Freshfields law firm.

Multiple bidders Such is the expectation for multiple bidders that a target is likely to consider auctioning itself rather than negotiating with a suitor, as was previously the norm, said Akihiko Manaka, co-head of investment banking and co-head of M&A in Japan at Bank of America.

“If it’s a good asset, the sort of company everyone wants, competition is naturally fierce, making it difficult to buy cheaply,” Manaka said. “The buyers really have to work for it.”