The devastating earthquake and tsunami in Japan on 11 March along with its ongoing nuclear power plant situation are cause for many businesses in Japan to stop and refocus efforts on domestic issues; but according to leading M&A lawyers, the situation is only short term. “I don’t think there will be much impact, if any. I think the only negative impact would be possible delays in settling and closing deals, because of the need to reallocate funds to operation in affected areas of Japan,” said Clayton Utz partner and qualified Japanese lawyer (bengoshi), Hiroyuki Kano.

Japanese companies have been increasingly active in the Australian M&A market in recent years, particularly in the energy & resources, agribusiness and property sectors. “A few of our clients have closed their offices, but they are still working, still sending and receiving emails,” Kano added.

Similarly, Freehills M&A partner Tony Damian, is confident that any impact on the M&A market in Australia will be short term. “I think there may be some short term impacts if there are any impacts at all. I don’t see a situation arising where outbound investment is no longer on the agenda for Japanese companies,” he told ALB. Outbound investment from Japan into Australia and the rest of Asia is based on long term commercial logic according to Damian, which would not be affected by the tragic events that have happened in recent weeks.

Even if Japanese companies were to slow down their aggressive M&A activity in coming months Damian says there are enough other parties interested in Australian assets to keep the industry busy. “From a whole sector perspective Japanese companies are not the only ones interested in these [Australian] assets. India and China are also increasingly active in the market,” said Damian.

In fact, amid the devastation and destruction caused by the earthquake Kano says there may be some increased opportunity for M&A in certain sectors. Until the earthquake the Japanese government had indicated it would increase nuclear power over the next 10 to 20 years, according to Kano.  But following the nuclear power plant uncertainty he says it is likely there will be some reconsideration in terms of energy sources, with possibly more coal and oil added to the mix. Additionally, some critics have said uranium miners will suffer because of the events in Japan, but from a Japanese energy provider point of view, this will be an opportunity for them to invest in uranium, if the share prices for uranium miners drop, says Kano. “This might be a good opportunity for some Japanese corporations,” he added.

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Law firms react to nuclear power plant uncertainty 18 March 2011

Australian firms take stock after Japan earthquake 14 March 2011