Transition from analog printing to digital printing drove coding and marking printer Domino to partner with a stronger company
Domino valued at 1.03 billion pounds (US$ 1.5 billion)
97% of today’s printing is analog, however there is a transition now to digital printing. Domino Printing Sciences is specialized on analog printing and now transitioning to digital printing, and needed a financially stronger partner to support increasing R&D costs and to finance expansion into the rapidly growing digital printing markets.
Brother Industries announced its intention to acquire publicly traded Domino Printing Sciences plc following the acquisition process prescribed in the UK for a total of around 1.03 billion pounds.
Domino Printing Sciences plc. “Domino. Do more.”
Domino Printing Sciences plc was founded as a spin-out from Cambridge Consultants in 1978 by Graeme Minto in Cambridge, UK, building on continuous inkjet printing technology (CIJ), and today has about 2300 employees and annual revenues of UKL 350 million (= US$ 526 million).
Domino explains its business in a series of infographics on Pin-it:
Brother Industries (ブラザー工業株式会社) was originally founded in 1908 as Yasui Sewing Machine Shoukai (安井ミシン商会) by Kanekichi Yasui (安井兼吉) as a producer of sewing machines. Today’s Chairman Yoshiro Yasui is a descendant of the founder.
On January 15, 1934, Nihon Sewing Machine Production KK (日本ミシン製造株式会社) was established, which was renamed Brother Industries KK (ブラザー工業株式会社) in 1962.
Currently (FY2014) Brother Industries has consolidated annual revenues of YEN 616 Billion (=US$ 5.2 billion), and it’s market capitalization as of April 22, 2015 is YEN 524 billion (US$ 4.4 billion).
Brother Industries is in the following main business areas:
On April 20, 2015 Dentsu announced another investment in its quest to strengthen its global footprint and to strengthen capabilities in mobile and digital: Dentsu acquires Israeli digital performance agency abaGada Internet Ltd..
abaGada Internet Ltd. – performance marketing: “Building your online marketing strategy to deliver outstanding results”
abaGada Internet Ltd. was founded by current CEO, Eval Chen, in May 2010 in Tel Aviv, Israel, and employs about 22 people.
Revenues were about UKL 3.5 million in the year ended December 2014.
abaGada performs search engine marketing (SEM) to increase customers’ website traffic, analysis of customer and user behavior.
Dentsu plans to rebrand and integrate abaGada into Dentsu’s iProspect brand.
abaGada as Dentsu’s technology hub in Israel
Many large global corporations have operations in Israel to link into Israeli’s legendary innovative strengths. Israel’s technology strength and attraction for Japanese corporations was recently visualized at a series of events in Tokyo, e.g. The Israeli Venture Fund meeting in Tokyo on March 4, 2014.
With the acquisition of abaGada, Densu now also has an antenna into Israel’s innovations.
Dentsu and Dentsu-Aegis
Dentsu dominates Japan’s advertising space, and is a very very strong force in Japan’s media industry sector, through control and management of major advertising channels with an overwhelming market share in Japan, and has been working hard to leverage its creative power and strength in Japan into a larger global footprint.
Nippon Life Insurance (日本生命保険相互会社) acquires 1% of stock of AXA Life Insurance
Nippon Life Insurance and AXA to jointly offer health insurance product Medi-AxN
Nippon Life Insurance (日本生命保険相互会社) and AXA Life Insurance announced a partnership, and Nippon Life intends to acquire 1% of outstanding shares of AXA Life Insurance to develop a long-term partnership.
Currently AXA’s market capitalization is US$ 62 billion, therefore Nippon Life’s 1% investment in AXA corresponds to about US$ 0.62 billion.
Nippon Life Insurance and AXA are planning to jointly market the health insurance product Medi-AxN (メディ・アン).
Nippon Life Insurance (日本生命保険相互会社) was founded on July 4, 1889, is based on Osaka, and has a total of 70,806 employees (of which 18,481 are in-house employees).
Sompo Japan Nipponkoa Holdings Inc is traded on the Tokyo Stock Exchange (Stock Code 8639), and current market capitalization is approx. YEN 1650 billion (= approx. US$ 14 billion)
Sir Stephen Gomersall on corporate governance: Board Meetings should be like sparkling water – not like tea
Globalization and the art of tea
Hitachi – Japan’s most iconic corporation – under the leadership of Chairman & CEO, Hiroaki Nakanishi embarked on the “Smart Transformation Project” to globalize, to face a world where value creation has moved from manufacturing to innovation and solving customer’s problems, and to overcome long years of stagnation and low profits or losses, despite strong technology capabilities.
One of the most important brains behind Hitachi’s reinvention and globalization is Sir Stephen Gomersall. After a long and successful career as diplomat in the British Foreign Service, culminating in the years as British Ambassador to Japan 1999-2004, Sir Stephen joined Hitachi in 2004 as the first foreigner responsible for proposing and implementing Hitachi’s overseas regional strategy. Later Sir Stephen became responsible for all of Hitachi’s business in Europe as Chairman and Chief Executive of Hitachi Europe, and in addition Sir Stephen also served as Director on the Board of all Hitachi 2011-2014 overseeing all of Hitachi Group’s business as Board Director. With Sir Stephen’s leadership Hitachi achieved major business breakthroughs in Europe.
On March 5, 2015, Sir Stephen gave the “Princess Chichibu Memorial Lecture to the Japan British Society at Ueno Gakuen University in Tokyo with deep insights on Japan-British relations, on comparison of Britain’s and Japan’s position in the world, and on the challenges of globalization facing Japan and Japanese corporations – in particular Hitachi.
Sir Stephen is very clear that there is no alternative to globalization: “Globalisation poses tough challenges for Japanese companies, but is the only way forward”.
Stephen Gomersall was British Ambassador to Japan from 1999-2004, and Hitachi’s Chief Executive for Europe and subsequently Board Director from 2004-2014. He is now Adviser to the CEO, Hitachi Ltd.
In December 2014, LINE and Microsoft announced that LINE will acquire the streaming music service MixRadio from Microsoft.
LINE already operates a Japan-only streaming music service “LINE Music”. Since music licensing is largely country or region specific, with this acquisition, LINE can develop global streaming music services building on existing licenses.
The service was developed as “NOKIA comes with Music” by NOKIA in 2007, a streaming music service which was built into certain NOKIA phones. Over the years, NOKIA also used the product names Nokia Music, Nokia Music Store and OVI Music Store for this streaming music service.
With the acquisition of NOKIA’s handset unit by Microsoft, the company became part of Microsoft, and Microsoft changed the name to “MixRadio”.
The company operates currently in 31 countries, and has a catalogue of about 36 million songs using the MP3 file format without Digital Rights Management (DRM) protection.
Competitors are Spotify and others.
Headquarters are in Bristol, UK, current CEO is Jyrki Rosenberg.
LINE Corporation
LINE Corporation is a Japanese/Korean messaging group, which is also the No. 1 top grossing global iOS and Android app provider.
For detailed discussion, see Japan game market report (398 pages, pdf-file):
On March 11, 2015 Dentsu announced another investment in its quest to strengthen its global footprint and to strengthen capabilities in mobile and digital: Dentsu acquires 80% of Greek leading independent digital agency Mindworks, and plans to integrate Mindworks into Dentsu’s Isobar and iProspect networks.
Dentsu has also acquired options to acquire the remaining 20% of Mindworks by 2017.
Mindworks – “the fastest growing digital agency in Greece”
Mindworks was founded in 2003, acquired by Atcom in 2009, and became an independent company again in January 2015.
As a division of Atcom, in the financial year ending December 2014, Mindworks had revenues of EURO 7.3 million. Mindworks has about 60 employees.
Mindworks – to be renamed Isobar-iProspect Advertising Services SA
Mindworks will be renamed Isobar-iProspect Advertising Services SA, and will be integrated into Dentsu’s global Isobar and iProspect brands, representing Isobar’s and iProspect’s entry into Greece’s markets.
Dentsu and Dentsu-Aegis
Dentsu dominates Japan’s advertising space, and is a very very strong force in Japan’s media industry sector, through control and management of major advertising channels with an overwhelming market share in Japan, and has been working hard to leverage its creative power and strength in Japan into a larger global footprint.
Nikon diversifies from digital cameras to medical imaging
Retinal imaging market estimated to grow to US$ 530 million in 2019
Currently 70% of Nikon’s business are digital camera, a rapidly shrinking market due to the popularity of smartphone cameras.
Inspired by SONY‘s investment in medical imaging company Olympus, Nikon diversifies from digital cameras into medical imaging, acquiring the Scottish retinal imaging company Optos plc – “The retina company”.
Nikon is reported to have approached Optos plc in December 2014, but seems to have been rejected.
On February 27, 2015, NIKON Corporation and Optos plc jointly announced the agreement for a recommended cash offer my by NIKON for the entire issued and to be issued share capital of Optos. Details can be found on NIKON’s official website for the Optos offer, where NIKON essentially offers a total of UKL 250.48 million (US$ 387 million) for all shares of Optos.
Optos plc was founded by Douglas Anderson in 1992 after his son became blind on one eye, because his retina detachment was diagnosed too late.
Optos plc had IPO on the London Stock Exchange in February 2006. Market capitalization on February 27, 2015 was UKL 250.48 million (US$ 387 million), jumping from approx. UKL 191 million (US$ 295 million) on February 26, 2015.
Optos has a market share of about 30% of the global market for retinal imaging. The global market size of devices for retinal imaging is growing and estimated to become US$ 530 million in 2019.
e-shelter facility services GmbH was founded in 2000, and offers 90,000 square meters of data center space in 9 locations across Germany, Switzerland and Austria.
NTT Communications was created with the privatization of NTT, which is formerly was Japan’s domestic monopoly telecommunications operator (KDD was had the monopoly for overseas telecommunications from Japan).
NTT Communications started globalization with the acquisition of US internet access, hosting and service provider VERIO for a approximately US$ 5.5 billion, announced on May 8, 2000.
acquire the rail business of AnsaldoBreda S.p.A. (with some exceptions) for € 36 million (US$ 41 million), and
to acquire Finmeccanica’s 40% holding in the rail signaling and rail systems company Ansaldo STS S.p.A. for € 773 million (approx. US$ 880 million)
Hitachi is expected to be required to launch a tender offer for all remaining shares of Ansaldo STS S.p.A. and if successful, will acquire all of Ansaldo STS S.p.A..
Hitachi is generally considered as one of Japan’s most important and most representative companies. Hitachi was founded in 1910 bei Namihei Odaira, and produced Japan’s first electrical motors. (For a detailed analysis of Hitachi and Japan’s electronics industry, read our report “Japan electronics industries: mono zukuri“.
While Hitachi grew into a conglomerate with a large number of different business areas, during the 15 years 1997-2012, Hitachi grew with an annual compound growth rate of only 0.48%, and during the period 1997-2012 suffered average annual net losses of YEN 45 billion (US$ 0.45 billion) per year. This difficult business situation is characteristic of Japan’s electronics industry overall, as discussed in our report “Japan electronics industries: mono zukuri“. One reason for this difficult situation is the so-called “Galapagos Effect“.
Indeed, Hitachi’s “Chief Transformation Officer” (CTrO) explained recently, that it is only in 2011/2012 that Hitachi started to benchmark important business performance data (eg. operating margin, R&D expenditure, administrative expenses, cost of sales etc) internationally. Until 2011/2012 Hitachi had only compared performance data with other Japanese companies such as Toshiba.
In April 2010, Hiroaki Nakanishi was appointed President of Hitachi, and he started the “Hitachi Smart Transformation Project” with the aim to rebuild a strong Hitachi into a truly global company. (You can find an overview of Hitachi’s Smart Transformation Project in our report: “Japan electronics industries: mono zukuri“).
Hitachi has great strengths in rail engineering, and the acquisitions of AnsaldoBreda and Ansaldo STS are an implementation of Hitachi’s Smart Transformation Project.
Other recent acquisitions and investments by Hitachi in the railway engineering field include:
AnsaldoBreda S.p.A. was formed in 2001 by the merger of the companies Ansaldo Trasporti and Breda Costruzioni Ferroviarie, and employs about 2400 employees.
Gio. Ansaldo & C. was founded in 1853 in Genoa to manufacture steam engines, steam locomotives, rail rolling stock.
Ing. Ernesto Breda and C. was founded in 1886, and became Societa Italiana Ernesto Breda (SIEB) in 1899.
Ansaldo STS S.p.A. is a manufacturer of rail signaling and transportation systems, and was founded in 2006 by the merger of a number of railway engineering companies, including:
US Union Switch & Signal (US&S), founded by George Westinghouse in 1881 in Pittsburgh, USA.
Compagnie des Signaux pour Chemins de fer (CSE), founded by Fernand Cumont in 1902, which built the first lines of the Paris Metro. Later renamed Company and Business Electrical Signals (CSEE)
40% of Ansaldo STS S.p.A.‘s shares are owned by Finmeccanica S.p.A. and Finmeccanica has now agreed to sell these 40% of shares to Hitachi. The remaining 60% are traded on the Borsa Italiana, and it is reported that Hitachi will be required to launch an offer to purchase all remaining 60% of shares following the acquisition of 40% from Finmeccanica.
Finmeccanica S.p.A. is an Italian industrial group, founded in 1948. As of 23 December 2014, 32.45% of Finmeccanica shares are owned by the Italian Ministry of Economy and Finance.
With the sale of the railway businesses, Finmeccanica will focus on aerospace, defense and security core business.
Sosei Group acquires candidate drugs to compensate for expected loss of patent protection for the Seebri inhaler in 2026
Heptares Therapeutics Ltd emerged from the MRC Laboratory of Molecular Biology at the University of Cambridge
Sosei Group Corporation (そーせいグループ株式会社) is a Japanese pharmaceutical group which mainly in-licenses pharmaceutica in Europe and North America, then brings these pharmaceutica to Proof-of-Principle stage in Japan, and consecutively out-licenses these pharmaceutica for further development and marketing.
In 2026, Sosei is expected to lose patent protection for its Seebri inhaler, and to compensate for this expected loss in revenues, Sosei acquired the Cambridge (UK) based Heptares Therapeutics Ltd for up to US$ 400 million (US$ 180 million in cash plus up to US$ 220 million in incentives if certain milestones are reached).
Heptares Therapeutics Ltd creates novel pharmaceutica targeting G protein-coupled receptors (GPCRs) using its StaR drug design technology.
Heptares Therapeutics Ltd started based on the research by Richard Henderson and Christopher Tate a the MRC Laboratory of Molecular Biology at the University of Cambridge (UK).
Heptares Therapeutics Ltd previously was funded by a consortium including MVM International Life Science Capital Management, Clarus Lifescience II LP, Novartis Bioventures Ltd., Takeda Ventures Inc. and the Stanley Family Foundation.
Sosei Group Corporation (そーせいグループ株式会社) was founded on June 22, 1990 with the main purpose to in-license pharmaceutica in the European and North American markets, to develop these pharmaceutica to the point of Proof-of-Principle (POP) in Phase 2a, and then to out-license these pharmaca for further development and marketing in Japan.
Holding Company: Sosei Group Corporation (そーせいグループ株式会社) (Tokyo and London, UK)
Sosei Co. Ltd.(株式会社そーせい) (Tokyo): pharmaceutical development and sales, business development in Japan
Sosei R&D Ltd. (London, UK): licensing and business development outside Japan
Activus Pharma Co., Ltd.(株式会社アクティバスファーマ) (Chiba, Japan): pharmaceutical development based on nano technology (APNT = Activus Pure Nano-particle Technology)
Jitsubo Co., Ltd. (JITSUBO株式会社)（Tokyo): development of peptide drugs, licensing of peptide API manufacturing technology, research related to discovery of peptide drug candidates. Acquired on December 11, 2014. Jitsubo KK was established in April 2005 by Professor Kazuhiro Chiba of the United Graduate School of Agricultural Science, Tokyo University of Agriculture and Technology. Sosei Group acquired 68.7% of voting rights for YEN 421 million (US$ 3.5 million)
On June 13, 2012, Rakuten acquired Spanish online streaming video-on-demand (VOD) provider Wuaki.tv.
Wuaki.tv – slogan: Your online video service
Wuaki.tv was founded 2009 in Barcelona by current CEO Jacinto Roca.
Wuaki.tv is funded by Bonsai Capital, Axon Capital, and Marc Ingla, former Vice-President of the football club “Futbol Club Barcelona”.
Wuaki.tv offers on-demand internet rental streaming video / media based on content distribution agreements with major Hollywood studies, local studies, and partnership agreements with TV and other device manufacturers. Download or storage is currently not supported.
“rental” is typically for unlimited viewing within a 48 hours rental period
“buying” typically allows unlimited viewing for a period of 3 years or longer
“Season Pass” available for some TV series
Wuaki.tv about Wuaki.tv: “We offer the latest Hollywood blockbusters, the most popular TV series, and the best films from independent filmmakers. All this, easily accessible from your computer, Smart TV, tablet, phone and gaming console.” (from the Wuaki.tv website)
Subscribers:
Spain: 600,000
Andorra:
United Kingdom: 400,000 (December 2014), started in July 2013 at an introductory price of UKL 2.99/month (to be raised to UKL 5.99)
France: (start on September 15, 2014 with a soft-launch for 10,000 users). Rakuten is planning to leverage PriceMinister’s 20 million members
Total: 1.85 million (December 2014)
Wuaki.tv is reported to enter Italy, Germany and 12 more markets in the near future.
Platforms:
Android
Chromecast
iPad
PC (with Adobe Flash Player (version 10 or higher) installed)
Mac (with Adobe Flash Player (version 10 or higher) installed)
Canon offers 50% premium on Axis Aktiebolag share price of Monday Feb 9, 2015
Canon is one of Japan’s most successful electronics groups, with imaging as one of Canon‘s core business areas.
On February 10, 2015, Canon launched a public offer with a total value of about SEK 23.6 billion (US$ 2.8 billion) to acquire all outstanding shares of the Swedish surveillance video company Axis Aktiebolag. The public offer will start on March 3, 2015, and is expected to end on April 1, 2015.
Canon aims for leadership in the global video surveillance market
With this acquisition (if successful), Canon is aiming to become a global leader in the video surveillance market, which is estimated to be about US$ 15 billion globally.
Axis to remain independent entity with current management
Under the applicable Takeover Rules, Axis Board of Directors needs to express an opinion on the impact of the potential takeover on employment, on Canon’s strategic plans, and the impact of these strategic plans on employment and the communities in which Axis does business.
Axis Board of Directors declared Canon’s intention to keep Axis AB as an independent entity under the current management, and continuing the current company culture, and to retain the Axis brand name.
Largest global SAP reseller and one of the largest SAP solution providers
On 23 October 2007, NTT DATA, NTT DATA Europe and itelligence AG announced a partnership, and NTT DATA announced to intention of an offer to acquire the shares at € 6.20 per share, about 37.2% higher than the closing price as of 22 October 2007.
On 13 November 2007, NTT DATA Europe published an offer to acquire outstanding shares. This offer ended at midnight on 2 January 2008, and NTT DATA Europe acquired 20,974,169 (= 87%) of outstanding shares, corresponding to an acquisition value of € 130 million, and a total company valuation of € 149.5 million.
On 29 January 2008, NTT DATA sold 2,459,523 shares to NTT Communications Corporation for € 15 million corresponding to € 6.10 per share, leaving NTT DATA with 18,514,646 shares.
On 20 December 2012, NTT DATA Europe announced that it had acquired an additional 3,831,574 shares (= 12.77%) in another tender offer, and an additional 1,317,605 shares (= 4.39%) outside this offer. As a result, NTT DATA holds a total of 29,544,428 shares (= 98.43%). Following this tender offer, NTT DATA proposed a “squeeze out” (aktienrechtlicher Squeeze-out) under the German Stock Corporation Act to acquire the remaining outstanding shares.
On 23 May 2013, the Annual General Meeting of itelligence AG approved the squeeze-out of remaining minority shareholders at a cash compensation of € 10.80 per share.
itelligence AG was delisted from the Stock Exchange in June 2013.
Thus itelligence AG on 23 May 2013 became a 100% owned subsidiary of NTT DATA Europe GmbH & Co KG, but will continue to operate as an independent group within the NTT DATA Group.
NTT DATA Business Solutions
In 2012 itelligence AG added to co-branding NTT DATA Business Solutions
itelligence AG “We make the most of SAP solutions!”
itelligence AG is a SAP solution provider.
Company history:
1989 Herbert Vogel and Wolfgang Schmidt founded S&P as a management consulting firm focused on introducing SAP. S&P was one of SAP’s first partner companies.
1994 S&P was converted into “SVP GmbH” (Schmidt Vogel & Partner)
1999 SVP GmbH was converted into SVC AG (Schmidt Vogel Consulting) and listed in an IPO
On 7 May 2001, the shareholders of SVC AG Schmidt Vogel Consulting agreed in the merger with APCON AG, forming itelligence AG
On 23 October 2007, itelligence AG entered into a partnership with NTT DATA
On 23 May 2013 itelligence AG became a 100% owned subsidiary of NTT DATA and the shares of itelligence AG were delisted
itelligence AG acquisitions
itelligence AG (and therefore NTT DATA via itelligence) has acquired a number of companies in the SAP solutions field:
2008: acquires shareholding in SAPCON a.s.
2009: ADELANTE SAS: On 19 March 2010 intelligence acquired 51% of ADELANTE SAS.
2009: Chelford SAP Solutions: on 6 August 2010, itelligence AG acquired 100% of Chelford SAP Solutions
2009: acquires RPF Consulting LLC
2009: acquires participation in 2B Interactive
2010: 2C Change A/S: on 14 June 2011, itelligence AG acquired 60% of 2C change A/S and an option to acquire the remaining 40%
Managed Security Services (MSS): Greschitz IT Security and Secode AB join NTT Com Security AG
On June 30, 2009, NTT Communications announced a public tender offer for the shares of Integralis AG offering € 6.75 in cash per share. Integralis at that point was traded on the Frankfurt Stock Exchange (Xetra).
In October NTT Communications acquired 78.4% of Integralis AG at a cost of € 59.1 million, to offer managed security services.
Integralis AG
The company was founded on 19 July 1993 as “Articon Fertigungsleitsysteme GmbH”, Articon Information Systems AG had IPO on the German Neuer Markt in 1998.
Integralis Ltd was founded in 1989.
On 29 February 2000, Articon Fertigungsleitsysteme GmbH and Integralis Ltd merged, and the resulting company was Articon-Integralis AG.
NTT Com Security AG is a listed company, and the company’s shares are traded in the m:access segment of the open market of the Munich Stock Exchange. There are 13,036,844 outstanding shares.
NTT Com Security AG / Integralis acquires Austrian Greschitz IT Security
Thomas Greschitz founded Greschitz IT Security 1995 to focus on internet security, in particular Check Point firewall systems in Graz. 2000 the company moved from Graz to Vienna.
On August 11, 2010, NTT Communications Corporation announced the acquisition of all shares of Secode AB, a managed security services (MSS) provider operating in the Nordic countries. Secode AB’s security operation centers (SOCs) were folded into NTT Communications network of SOCs.
On December 1, 2011, NTT Communications transferred the shareholding in Secode AB to Integralis AG (today’s NTT Com Security AG), making Secode AB a fully owned subsidiary or Integralis AG (Today NTT Com Security AG).
globalizing Docomo’s mobile payment and content services
bringing German mobile know-how to Japan
On September 11, 2009, NTT Docomo announced a voluntary public tender offer for shares of net mobile AG. The tender offer was closed on November 27, 2009, and Docomo Deutschland GmbH acquired 6,126,567 shares at € 6.35 per share corresponding to 79.59% of the company, at a total acquisition cost of € 38.9 million, thus valuing net mobile AG at € 48.9 million.
Acquisition of Bankverein Werther AG to create Net-m Privatbank 1891 AG
On September 22, 2011, NTT Docomo announced the additional investment of up to € 28.4 million (YEN 3.1 billion) in net mobile AG, for the purpose of net mobile AG acquiring Bankverein Werther AG.
The company goes back to the foundation of the financial cooperative “Vorschussverein zu Werther”, which was founded in 1877 in Werther, near Bielefeld in Germany. In 1891, the Vorschussverein zu Werther was transformed into the bank “Bankverein Werther Aktiengesellschaft”. During 2011, Net Mobile AG acquired 93% of shares of Bankverein Werther AG. On December 1, 2011, the traditional banking business, including the trademark “Bankverein Werther” was sold to the regional bank “Volksbank Paderborn-Höxter-Detmold eG“.
With the sale of the traditional banking business and the tradename and brand, the bank reentered the market as Net-m Privatbank 1891 AG. At the end of 2012, Net Mobile AG acquired all remaining shares, so that Net-m Privatbank 1891 AG became a 100% owned subsidiary of net mobile AG.
net mobile AG
net mobile AG was founded on 9 October 2000 in Köln, and headquarters later the same year moved to Düsseldorf (Handelsregister/trade registry No. HRB 48022). In 2001, Net Mobile AG acquired SMS Infowelt. net mobile AG’s business at that time was marking info-SMS, ringing tunes, and other information services for mobile phones.
net mobile AG is a public company, traded at the Frankfurt and München Stock Exchanges (Freiverkehr).
Currently the market cap of net mobile AG is € 77 million (US$ 94 million).
Idemitsu Kosan (出光興産株式会社) aims for market leadership
On December 20, 2014, both Idemitsu Kosan and Showa Shell separately announced that they had entered into discussions of possible business reorganization, indicating that Idemitsu Kosan may acquire Showa Shell next year. Because Showa Shell Sekiyu KK is a Japanese company traded on the Tokyo Stock Exchange, such an acquisition would be via a tender offer for outstanding shares.
With the development of fuel efficient cars and the shrinking population, refined oil products are a shrinking market in Japan, and a merger between Idemitsu Kosan and Showa Shell is a consequence of consolidation of this shrinking market.
This merger would also mean a departure of Royal Dutch Shell from the Japanese market.
Showa Shell Sekiyu KK (昭和シェル石油株式会社)
Listed on Tokyo Stock Exchange (TKS5002)
Market cap: YEN 384 billion (= US$ 3.2 billion)
Although Showa Shell Sekiyu KK (昭和シェル石油株式会社) generally uses the famous yellow and red Shell logo, Showa Shell Sekiyu KK (昭和シェル石油株式会社) is not a wholly owned subsidiary of Royal Dutch Shell plc, but its a public company traded on the Tokyo Stock Exchange (TSE5002), with a large number of shareholders beyond Royal Dutch Shell plc, which is the largest shareholder with a holding of 35.0%.
Given Royal Dutch Shell plc’s holding of 35.0%, this holding currently is worth approx. YEN 134.4 billion (US$ 1.12 billion).
35% of the reported tender offer price would correspond to YEN 175 billion (US$ 1.44 billion)
Revenues and market shares in Japan’s oil/gasoline markets
With a merger of Idemitsu and Showa-Shell, the combined company will have a firm second position with a 30% market share, very close to the market leader JX Holdings with 34% market share.
History of Shell and Showa Shell Sekiyu KK (昭和シェル石油株式会社) in Japan
Showa Shell Sekiyu KK (昭和シェル石油株式会社) is the basis of the Royal Dutch Shell Group in Japan.
Showa Shell Sekiyu KK (昭和シェル石油株式会社) was formed on January 1, 1985 by the merger of Showa Oil Co Ltd and Shell Sekiyu KK. The Royal Dutch Shell Group had a shareholding in Showa Oil Co Ltd since June 1951.
Shell Sekiyu KK goes back to Samuel Samuel & Co, started by Samuel Samuel in partnership with his brother Marcus Samuel, 1st Viscount Bearstead (subsequently The Lord Bearstead and The Rt. Hon. The Viscount Bearsted Bt. – the founder of the Shell Transport and Trading Company), in Yokohama around 1876. Samuel Samuel & Co set up the Rising Sun Petroleum Co Ltd. In 1947, Rising Sun Petroleum Company was renamed Shell Sekiyu.
Shell Sekiyu and Showa Sekiyu merged in 1985 to form Showa Shell Sekiyu.
Toray acquires Saati’s European fabric business: Toray builds integrated supply chain in Europe
Toray management program Project AP-G 2016: “thorough implementation of growth strategy through innovation and aggressive management”
Toray acquires Saati’s European fabric business: Toray announced on 10 December 2014 the agreement to acquire the European carbon fiber fabric and prepreg business of Saati SpA. Toray will take over Saati’s plant located in Legnano (Milano Province) in January 2015, renaming the operations “Composite Materials (Italy) Srl (CIT)” and to become a fully owned subsidiary of Toray.
Saati will continue to own and operate the Saati composite business in America.
Saati SpA
SAATI SpA was founded in 1935 to manufacture silk flour mesh fabrics, and employs about 850 people.
Consolidated net sales: YEN 2.3 trillion (US$ 23 billion)
Consolidated operating income: YEN 180 billion (US$ 1.8 billion)
ROA 8%
ROE 10%
Toray’s long term vision “AP-Growth TORAY 2020“: become “a global top company of advanced materials”
AP-Growth TORAY 2020 is a unified growth map for the next 10 years based on Toray’s corporate vision of “contributing to society through the creation of new value with innovative ideas, technologies and products”.
Key KPI’s for AP-Growth TORAY 2020 (to be achieved around 2020)
consolidated net sales: YEN 3 trillion (US$ 30 billion)
Consolidated operating income: YEN 300 billion (US$ 3 billion)
Operating income margin: 10%
ROA: 10%
ROE: 13%
Toray Industries, Inc. (東レ株式会社) “Innovation by chemistry” (化学による革新と創造) (TSE 3402, LSE TKK)
Toray Industries, Inc. (東レ株式会社) was founded on 12 January 1926 with an investment by Mitsui Bussan. The company was incorporated as Touyou Rayon (東洋レーヨン) on 16 April 1926.
In 1970 the company name was changed to Toray KK (東レ株式会社). Toray is the abbreviation of Touyou Rayon (東洋レーヨン).
Toray’s main business are:
fibers and textiles
plastics and chemicals
IT related products: films, color filters, products for IC production, graphics materials
carbon fiber composites
environment and engineering: water treatment membranes, materials for housing, environmental equipment
Had Vodafone succeeded in Japan, Vodafone-Japan could be worth about US$ 50 billion today, about 1/2 of Vodafone’s total global market-cap today, and combined investment in Japan by European (EU) companies could be about 50% higher than it is today!
With COLT about to acquire KVH, it might seem that this is the only foreign infrastructure based telecom provider left in Japan’s telecom market after a long string of management failures, including Vodafone, Cable & Wireless, Willcom, WorldCom and others.
However, foreign investment in Japan’s telco/cloud infrastructure has not ended, and we believe the next wave including AWS, Microsoft, Google et al may become far more successful than the first wave.
For companies considering investment or business expansion in Japan, it is useful to understand the potential market-capitalization which can be achieved in Japan in case of success, instead of just looking at the sales figures:
as an example, combined EU investment in Japan is estimated to be approx. € 85 billion (US$ 106 billion) in total,
had Vodafone succeeded in Japan, total investment in Japan by European (EU) companies would be about 50% higher than it is today.
Why Vodafone-Japan could be worth US$ 50 billion (1/2 of Vodafone’s global market cap) had it been successful
Let us estimate what Vodafone-Japan could be worth today, had it not failed:
Since Vodafone-Japan’s sale to SoftBank on March 17, 2006, Japan’s telecom market has continuously grown, so we can expect today’s valuations to be considerably higher than in 2006. Lets assume that Vodafone-Japan had been successful, and had grown in sync with competitors NTT-Docomo and KDDI, and lets assume that Vodafone-Japan would have been able to continue J-Phone’s innovations to keep subscription figures and financial results in sync with KDDI. In this case, it would not be unreasonable to assume that Vodafone-Japan’s market capitalization today would be KDDI’s minus the value of KDDI’s global data-center business. Thus we arrive at an estimate, that Vodafone-Japan would have a market-cap value on the order of US$ 50 billion today.
Thus, had Vodafone been successful in Japan, EU investments in Japan could be about 50% higher than they are today, and Vodafone’s global market cap could be 50% higher as well.
Market capitalization (Dec 2, 2014):
NTT Group: US$ 61 billion
NTT-Docomo: US$ 68 billion
KDDI: US$ 58 billion
SoftBank: US$ 80 billion
Vodafone plc (global group): US$ 97 billion
Vodafone-Japan market cap, had it been successful (our estimate): US$ 50 billion corresponding to approx. 50% of Vodafone’s global market cap)
total investment in Japan by all European (EU) companies combined: € 85 billion (= US$ 106 billion)
(see: EU-Japan direct investment register)
EU investment in Japan is about € 85 billion – it could be 50% higher!
Both Colt and KVH were founded with investments by Fidelity Investments and associated companies, Colt in London in 1992, and KVH in 1999 in Tokyo, as telecommunications service providers for the financial industry and other industrial customers. While KVH remained 100% owned by Fidelity and associated companies, Colt was listed on the London Stock Exchange in 1996.
Initially founded as telecommunications companies, both Colt and KVH have developed into “information delivery platforms” based on networking infrastructure, data centers, optical fibre networks and associated management and information services.
On November 12, 2014, Colt announced the plan to acquire KVH for YEN 18.595 billion (€ 130.3 million = US$ 160 million) in cash from KVH’s owner Fidelity Investments.
Since KVH is 100% owned by Fidelity Investments, and Colt have also been founded by Fidelity which is still a shareholder, the acquisition needs to be approved by independent Directors and by independent shareholders of Colt.
A General Meeting of Colt’s shareholder has been announced for December 16, 2014 at 10:00am in Luxembourg where the approval of shareholders of Colt will be sought.
Colt – the “information delivery platform”
Colt was founded by James P Hynes (Jim Hynes) with investments from Fidelity Investments and related companies in 1992 in London, and went public with an IPO on London Stock Exchange in 1996.
Colt operates 20 data centers and substantial optical fiber networks, and has more than 5000 employees.
Colt’s annual revenues are € 1,575.8 million (= US$ 2 billion) in 2013.
Colt market capitalization currently is UKL 1.19 billion (= US$ 1.9 billion).
KVH – “Asia’s information delivery platform”
KVH was founded by Fidelity Investments and related companies on April 2, 1999 in Tokyo.
KVH operates 9 Data Centers, owns optical fiber networks in Japan and to major financial centers in the world, and has about 590 employees.
KVH annual revenues are approx. € 133.6 million (= US$ 170 million) in FY2013, i.e. Colt is about 10 times bigger in terms of market cap and sales than KVH.
KVH owns optical fibre, ethernet, data center data infrastructure in Tokyo, Osaka and other parts of Asia. This photograph shows KVH owned cable infrastructure in the center of Tokyo
The planned acquisition values KVH at YEN 18.595 billion (€ 130.3 million = US$ 160 million), i.e. COLT is about 12 times bigger than KVH in terms of market capitalization/value.
Implications of acquisition of KVH by Colt – view as a Japan (and Asia) market entry by Colt
From the point of view of Colt, the acquisition of KVH – which has always been a sister company via the common investor Fidelity Investments, and common founder Jim Hynes – is a relatively low risk market entry into Japan and several other major Asian markets, and promises to have a very high chance of success for all parties.
We need to keep in mind, that essentially all other large scale market entries into Japan by infrastructure based telecommunication operators have failed: Vodafone, Cable & Wireless, WorldCom’s market entries into Japan’s telecom markets have all failed, and to our knowledge KVH is the only remaining internationally owned telecom infrastructure company in Japan today.
Essentially, both Vodafone and Cable & Wireless failed in Japan’s telecom markets, because they did not have the multitude of skills and know-how needed to manage a telecommunications business in Japan in a competitive manner. Colt with the acquisition of KVH acquires this know-how, and KVH at the same time has been an internationally managed company from the outset, so that Colt avoids the risks of acquiring a 100% Japanese companies such as Vodafone had done by acquiring Japan Telecom, with all the cultural issues that this entails.
At the same time, we also need to keep the scale in mind. While KVH has a market capitalization (i.e. the purchase price) of US$ 160 million, it can be argued that Vodafone-Japan could be expected to have a capitalization of around US$ 60 billion today had it been successful – i.e. about 375 times larger than KVH.
Japan’s largest telecommunication operator NTT currently has a market capitalization of US$ 62 billion, i.e. about 390 times larger than KVH, while SoftBank’s market capitalization is about 500 times larger than KVH’s.
Thus, if we see Colt’s acquisition of KVH as a market entry into Japan by a European telecom operator, then this is on an approx. 300-400 times smaller scale than Vodafone’s failed market entry into Japan, and with far better circumstances, and a far higher chance of success, and in our view with very carefully controlled risks.
Without doubt, a merger of KVH with Colt was on the minds of Fidelity Investments and Jim Hynes, when they founded both KVH and Colt in the 1990s.
Axpo Kompogas Engineering AG (Komeng) is an EPC (engineering, planning, construction) company planning and constructing dry fermentation plants using the Kompogas process, which produces biogas and compost from biomass via a dry fermentation process.
Address: Flughofstrasse 54, CH-8152 Glattbrugg, Switzerland
CEO: Bernard C. Fenner
Business: EPC (engineering, procurement, construction) and maintenance of Kompogas plants
Established: 2013
Capital: approximately SFR 3.6 million (YEN 425 million)
Kompogas method generates biogas by methane fermentation from kitchen and other organic waste
The Kompogas process was developed about 1988-1989 by the Swiss entrepreneur Walter Schmid initially on his private balcony.
The Kompogas process produces biogas and compost from biological, organic waste via a fermentation process. The resulting biogas can be used for cars and trucks, and the compost as organic fertilizer.
AXPO is an electricity operator, generating, distributing, selling and trading electricity, and is fully owned by cantons of north-eastern Switzerland.
Hitachi Zosen Inova AG (HZI AG) was created when Hitachi Zosen acquired AE&E Inova Holding AG on December 20, 2010, after it filed for bankruptcy in Zurich on December 3, 2010, read details here.
AE&E Inova Holding AG goes back to a department for thermal waste management of the Gesellschaft der Ludwig von Roll’schen Eisenwerke which was founded in 1823.
Standardkessel (founded 1925) and Baumgarte (founded 1935) started as classic boilermakers, and today supply turnkey power plants and power plant components for fossil energy sources, e.g coal, gas and oil, and also for alternative energy carriers, e.g. biomass, municipal waste, and industrial waste.
Standardkessel Power Systems Holding GmbH is a holding company owning 100% of the shares in the Standardkessel Baumgarte Group, which consists of:
Standardkessel GmbH (founded 1925)
Baumgarte GmbH (founded 1935)
Standardkessel Baumgarte Service Holding GmbH (founded 2008)
Standardkessel-Baumgarte were founded as classic boiler makers, and developed into makers of biomass and waste-to-energy power plant suppliers and service group.
By acquiring Standardkessel-Baumgarte, JFE Engineering can strengthen overseas business, accelerate globalization and move into the biomass and waste-to-energy electricity and power generation sector.
Japanese companies’ strategy to overcome cultural post-merger problems: European subsidiaries acquire
Heraeus Kulzer acquires EGS, expanding both Mitsui Chemicals’ foot print in Europe and global market penetration for Mitsui Chemicals’ dental supplies business
Japanese companies are well known to have substantial difficulties with post merger integration as a consequence of massive cultural differences which need to be overcome for successful acquisitions. One way to mitigate these difficulties is for Japanese companies to acquire a substantial European company, make this acquisition a success, and then acquire additional companies via this first successfully integrated subsidiary. One example for this path is Dentsu with its Aegis acquisition, see: Dentsu acquires Aegis. Subsequently, Aegis acquires a string of companies all over Europe for Dentsu.
Mitsui Chemicals follows a similar strategy by first acquiring Heraeus Kulzer, which then again acquires the CAD/CAM specialist Enhanced Geometry Solutions, EGS Srl.
Enhanced Geometry Solutions, EGS Srl, makes 3D scanners, CAD software, and digital tools for scanning, modeling, designing workflow in dental laboratories.
As part of the restructuring efforts, Panasonic invests in Spanish car parts maker Ficosa in order to jointly develop Panasonic self-driving car technology.
We have documented in our blogs and reports on Japan’s electronics industry how Japan’s electronics giants lost their global dominating advantages as TVs and other electronics products became commodities, and Japanese electronics makers were blind sided by Apple, Samsung and many other faster innovators. Japanese electronics companies including Panasonic were slow to recognize that their market leading positions were rapidly melting away, and were slow to change.
As part of the restructuring efforts, Panasonic sold several semiconductor fabs to Tower-Jazz, and in a move into car parts, Panasonic invests about US$ 275 million to acquire an approximately 50% stake in the Barcelona based Spanish car parts maker Ficosa International, in order to jointly develop self-driving car technology.
Ficosa had acquired the Sony Barcelona Technology Center
Nokia to expand market share in Japan, Panasonic to focus on core business
Panasonic, after years of weak financial performance, is focusing on core business. Nikkei reports that Panasonic is planning to sell the base station division, Panasonic System Networks, to Nokia.
Nokia expands No. 1 position in Japan
Our analysis of Japan’s mobile phone base station market shows, that Nokia became No. 1 in Japan’s base station market with the acquisition of Motorola’s base station division. Acquisition of Panasonic System Networks will expand Nokia’s NSN to expand market leadership in Japan’s mobile phone base station market.
Panasonic System Networks
Panasonic System Network’s market share is estimated at around 10% of Japan’s mobile phone base station market, while international sales are essentially non-existent. Thus Panasonic System Network’s global market share is negligible, giving Panasonic little possibility for the scale necessary to operate a stable profitable longterm base station business.
Japan’s mobile phone handset makers and base station makers have for many years focused on serving Japan’s internal market only, and in particular have focused on Japan’s No. 1 mobile phone operators NTT Docomo. This gave Japan’s mobile phone base station makers a temporary home advantage, however with the value shift from hardware to software, they lack scale, and are subsequently uncompetitive globally. More about Japan’s Galapagos effect here.
The context: EU investments in Japan
While Japanese investments in Europe are booming, recently European investments in Japan have been stagnating after Vodafone’s withdrawal from Japan, and there are very few new European investments in Japan. Could it be that Nokia’s investment in Japan starts a new trend of renewed European investments in Japan?
The Switch Engineering Oy was valued US$ 265 million in 2011
Trend: Japanese companies acquire European renewable energy technology companies
On July 2, 2014 Yaskawa Electric Corporation acquired all shares of The Switch Engineering Oy, which are not owned by the Switch. The acquisition price was not announced, however, AMSC in 2011 had agreed and later cancelled to acquire The Switch for US$ 265 million. Therefore we can expect the acquisition price to be at least of this order if not much higher.
Vacon plc held approx. 14% of The Switch directly and another approx. 5% through the investment fund Power Fund I. On July 1, 2014, Vacon plc sold all these shares to Yaskawa Electric Corporation.
Finnish Industry Investment sold a holding of The Switch to Yaskawa.
The Switch Engineering Oy “Bringing you power”
The Switch Engineering Oy makes permanent magnet generators (PMG) and full-power converters (FPC) for wind turbines (1 MW – 8 MW and higher), marine applications and other industrial applications.
The Switch was founded in 1996, and in 2013 reported sales of € 46.2 million (US$ 53 million), and employed 175 people. The Switch headquarters are in Vantaa, Finland.
The Switch Engineering Oy was valued US$ 265 million in 2011
On March 14, 2011, American Superconductor Corporation AMSC signed a definitive agreement to acquire The Switch for US$ 265 million. However, on October 31, 2011, AMSC announced the cancellation of this agreed acquisition and paid € 14.2 million as break-up fee, a sum which had already been paid as an advanced payment of the acquisition price.
Yaskawa Electric Corporation (株式会社 安川電機)
Yaskawa Electric Corporation was founded on July 16, 1915, and headquarters are in Kitakyushu in the West of Japan.
Sales by business segment (FY2014: Fiscal year ended March 2015)
Motion control: YEN 188.1 billion (US$ 1.571) 47%
Robotics: YEN 136.0 billion (US$ 1.136 billion) 34%
System Engineering: YEN 41.0 billion (US$ 0.342 billion) 10%
NuGeneration becomes a joint-venture between Toshiba (60%) and GDF Suez (40%)
In December 2013, Toshiba purchased 50% of NuGeneration Ltd from Iberdrola (of Spain) for UKL 85 million (US$ 146 million).
On June 30, 2014, Toshiba announced to purchase an additional 10% of NuGeneration Ltd from GDF Suez.
Thus, NuGeneration becomes a joint-venture between Toshiba (owning 60% of NuGeneration) and GDF Suez (owning 40% of NuGeneration).
NuGeneration Ltd (NuGen)
NuGeneration Ltd. (NuGen) owns an option to purchase the 190 hectare Moorside site, located to the north of Sellafield, from the UK Nuclear Decommissioning Agency.
NuGeneration plans to build a 3.4 GigaWatt nuclear power station using three AP1000 reactors built by Westinghouse. Westinghouse is owned by Toshiba (87%), by Kazakhstan based Uranium and nuclear fuel producer KazAtomProm (10%) and the Japanese engineering company IHI (3%).
When finished, NuGeneration’s Moorside nuclear power plant is expected to deliver about 7% of UK’s electricity.
Two factors drive Toshiba to acquire a majority holding of NuGeneration (NuGen):
CSC Media Group of UK (formerly Chart Show Channels) owns 19 cable and satellite channels acquired by SONY
CSC Media Group acquisition for UKL 107 million
On June 26, 2014 SONY announced the acquisition of the CSC Media Group of UK for a total of 107 million pounds from the major shareholder Veronis Suhler Stevenson.
CSC Media Group owns and operates 16 satellite and cable channels in the UK.
With this acquisition SONY owns 25 TV channels in Great Britain, and about 64 channels globally.
We believe that with this acquisition SONY aims to strengthen the profitability of content distribution to accompany the restructuring of SONY’s loss making electronics division, which includes the production of TV sets.
Nippon Steel & Sumikin Engineering Co Ltd (Nippon Steel & Sumitomo Metal Corporation, Tokyo Stock Exchange Code 5401) on May 7, 2004 acquired 100% of the shares of Fisia Babcock Environment GmbH (located in Gummersbach, Germany) from Impregilo International Infrastructure N. V. (which is wholly owned by Salini Impregilo S.p.A., Milano, Italy), for EURO 139.3 million.
Canon acquires video surveillance specialist Milestone Systems A/S in June 2014
Milestone Systems A/S is a leading IP based video management software (VMS) and network video recorder (NVR) provider for video surveillance
Milestone System was founded in 1998 to apply IP technology from the financial sector to the surveillance video sector, which had previously been predominantly analogue.
10 July 2008, Index Ventures announced an investment of $27 million (17 million Euros) into Milestone Systems.
IHD estimates that the video surveillance market size is on the order of US$ 13 billion, while Milestone Systems A/S is estimated to have an 8% market share.
Founded in 1998 by Henrik Friborg and John Blem by applying their knowledge of IP technology for real-time financial systems to digital video surveillance, replacing previously mainly analogue recording techniques.
In June 2014 Milestone Systems A/S was acquired by Canon, reports to Canon Europe, but works as a stand-alone company.
Revenues: DKK 709 million (= US$ 110 million) (2016)
Operating incomee: DKK 121 million (= US$ 19 million) (2016)
Net income: DKK 42 million (= US$ 6.5 million) (2016)
Employees: 600 (2015)
