Japan Inc II: Bengoshi & Zaibatsu to join forces
Ushinawareta junen (the lost decade) is officially over and Japanese companies have emerged cashed up and ready to plunder ailing markets across the globe. But, as ALB reports, while Japan's band of bengoshi and gaggle of gaiben are looking forward to an upswing in work, micro matters loom large on the horizon
While the claim that the fundamentals of the US economy were strong even though it had sunk to its lowest point since the Great Depression was one of the more memorable gaffes served up by the 2008 presidential race, making similar claims in relation to the Japanese economy maybe somewhat less erroneous. For although all economies throughout the region are going into a slowdown, the statistics for the third quarter of 2008 show the Japanese economy is more robust than others.
In addition to Yen bond offerings hitting their second-highest volume in the last eight years, peaking at a total of ¾15.36trn from just on 630 deals, samurai bond issuances are the highest on record, reaching nearly ¾2trn from 65 deals. Add to this foreign direct investment (FDI) outflow of nearly US$20trn (the second-highest of all G7 nations) over the last 13 weeks alone and it is easy to see why lawyers in Japan are looking forward to the months ahead as the Japanese economy moves out from the shadows of the so-called 'lost decade'.
"Up until about a year and a half ago, the Japanese economy was still in restructuring mode and it is only in the last two to three years that it has fully emerged from 10 years of recession," said Stephen Bohrer, a counsel with Nishimura & Asahi and head of the firm's cross-border transaction group. Bonnie Dixon, a partner at Atsumi Partners, agrees, noting that the last year in particular has heralded a new era for the Japanese economy and it is the nation's domestic companies that are showing a renewed appetite for overseas acquisitions, with US companies looming as likely targets.
"The Japanese economy has turned the corner, and many of the lawyers in town are reporting an upturn in business directed at offshore M&A activity, particularly the US," says Mansanori Sato, a partner at Mori Hamada & Matsumoto. For Sato, and indeed all lawyers ALB spoke to, M&A activity has yet to reach its peak. "Domestic M&A transactions are flourishing, yes, but this is only part of the story. If the events of the last few months are any indication, then the market for domestic M&A could double or more in the medium to long term."
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