Japanese M&A abroad: Four critical factors for Japanese corporates making major international acquisitions, Stuart Chambers, CEO of NSG Group



October 16, 2008 by Gerhard Fasol

Stuart Chambers, CEO of NSG Group, gave a press conference on October 16, 2008, here are some notes and thoughts.

On February 16th, 2006, Nippon Sheet Glass’ offer for the 80% of Pilkington plc it did not already own, for US$ 3.14 billion in total, was accepted by Pilkington’s share holders and the acquisition was completed in June 2006. At the 142nd Annual Shareholder Meeting on June 27th 2008, Stuart Chambers was appointed Representative Executive Director, President and CEO of NSG Group.

Here some essential points of Stuart Chambers’ presentation, entitled “Four critical factors for Japanese corporates making major international acquisitions”.

The four critical factors in the title are:

  1. Integration (share holders and customers demanded integration, because the value of the combined NSG + Pilkington after the acquisition must become bigger than the sum of its parts -> must change HR management, and board)
  2. Repaying debt -> senior management must understand the balance sheet
  3. Identifying growth opportunities for the future (glass for solar energy)
  4. Succession

From the outset the aim was not to create a Japanese company with overseas subsidiaries, but to create an international company, headquartered in Japan and listed on the Tokyo Stock Exchange. Therefore the greatest changes needed to be made in Japan.

NSG Group changed from an exclusively Japanese Board, to a new Board structure:

Board of Directors: 12 (7 Japanese + 5 non-Japanese) and

Executive Officers: 23 (11 Japanese + 12 non-Japanese)

These changes were necessary in order to retain non-Japanese management talent from leaving the acquired company after the merger.

The Board structure was changed from the traditional Kansayaku (Corporate Auditor) structure to a Board with Committees.

HR management changes from internal promotion according to time served in each job level to the international practice of combining internal and external hiring according to capability and demonstrated performance ignoring age as a factor.

Stuart Chambers, CEO of NSG Group
Stuart Chambers, CEO of NSG Group

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