Nippon Telegraph and Telephone Corporation (NTT) has announced plans to acquire NTT Data Group Corporation in a move estimated at ¥2.37 trillion ($16.5 billion). This acquisition is aimed at expanding NTT’s artificial intelligence (AI) capabilities and responding to regulatory pressure for Japanese companies to streamline their organizational structures.

The offer for NTT Data shares is set at ¥4,000 each, which represents a 34% premium on the stock’s previous closing price. The tender offer is scheduled to run from May 9 to June 19, with NTT Data planning to delist its shares if the acquisition goes through. Following the announcement, NTT Data’s stock rose to its highest in 25 years, gaining 17% in value, while NTT’s stock saw a slight decline of 2.1%.

Acquiring NTT Data, known for being one of the largest operators of data centers globally, would centralize AI within NTT’s business strategy, enhancing the influence of its various sectors internationally. With one-third of NTT owned by the Japanese government, the firm competes with notable players like KDDI Corporation and SoftBank Corporation in the competitive AI landscape, especially as Japan pushes to create a native AI platform to rival established companies like OpenAI and China’s DeepSeek.

NTT Data’s CEO, Yutaka Sasaki, acknowledged the need for substantial investments to stay competitive and remarked that becoming a wholly-owned subsidiary would enhance their financial capacity to pursue significant mergers and acquisitions while expediting decision-making processes needed for data center expansion.

The proposal to take NTT Data private comes amid growing shareholder concerns over the complex relationships within Japan’s larger conglomerates. The Tokyo Stock Exchange has increasingly sought to ensure that minority shareholders are protected amid these transformations, leading to a wave of consolidations. Recent similar transactions include NEC Corp.’s acquisition of its affiliate and speculations around Toyota Motor Corporation’s potential buyout of its subsidiary.

Notably, NTT Data has a strategic partnership with OpenAI, providing AI services to various clients, including U.S. municipalities and federal agencies. The integration of NTT Data is expected to bolster NTT’s growth, driven by a significant focus on AI research and the development of innovative, energy-efficient technologies suitable for Japan’s limited resources.

NTT has invested heavily in AI research and is working on photonic chips specifically designed for efficient energy use. Additionally, NTT has developed its own large language model, "tsuzumi," which emphasizes low energy consumption. As NTT’s CEO Akira Shimada stated, transforming a large organization like NTT—a "big ship" with 340,000 employees—requires time, but there is now a clear consensus to advance in this direction.

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