Japanese companies have a dramatically different culture than Western, European or US companies, and Dentsu is one of Japan’s more traditional companies, at the same time home to Japanese creative talent.
To bridge this gap in cultures, Dentsu acquired the French/UK company Aegis Group plc on 5 July 2012, creating Dentsu Aegis Network. Dentsu has used Dentsu Aegis Network as a bridge head for many acquisitions in Europe and the Mediterranean are, bridging cultural differences.
Gleam Futures: “We manage digital-first talent”
Gleam Futures describe their business as “we develop, monetize & protect” digital-first talent, e.g. YouTube stars.
Established: 2010
Employees: 37
Talents: 40
Combined subscriber base: approx. 60 million
Revenues: UK Pounds 4.35 million (Fiscal Year ending Dec 2016
SoftBank acquires ARM: acquisition completed on 5 September 2016, following 10 years of “unreciprocated love” for ARM
On 18 July 2016 SoftBank announced a “Strategic Agreement”, that SoftBank plans to acquire ARM Holdings plc for £24.0 billion (US$ 31.4 billion, ¥ 3.3 trillion) paid as follows:
SoftBank’s acquisition of Vodafone Japan – in combination with having developed YAHOO-Japan into the leading internet service company in Japan – enabled SoftBank to become a key global player in mobile communications.
Masayoshi Son: unreciprocated love for ARM for 10 years
In the Nikkei interview of 3 September 2016, Masayoshi Son explains that he had an “one-sided / unreciprocated love for ARM” for at least 10 years, but decided to acquire SPRINT first. After acquiring SPRINT he had to pay down debt before being able to acquire ARM now.
ARM Holdings plc
ARM was founded on 27 November 1990 as Advanced RISC Machines, however the abbreviation ARM was first used in 1983 and initially meant “Acorn RISC Machines”.
Acorn Computers Ltd was founded in 1978 in Cambridge (UK) by Hermann Hauser and Chris Curry to produce computers, and its most famous product was the BBC Micro Computer.
ARM has built an ecosystem of IC design systems and platforms which are at the core of low energy consumption ICs and CPUs for smartphones and many other electronic devices and cars. ARM may become or already is one of the core technology companies for the Internet of Things (IoT).
SoftBank’s ARM Business Department’s name changed to “New Business Department”
On 3 September 2016 SoftBank announced that the name of SoftBank’s ARM Business Department has been changed to SoftBank New Business Department.
Toray acquires Delta-Tech: 55% of Italian fiber manufacturer Delta-Tech SpA including Delta-Preg SpA
Toray management program Project AP-G 2016: “thorough implementation of growth strategy through innovation and aggressive management”
Toray acquires Delta-Tech: acquires 55% of outstanding shares of the Italian prepreg manufacturer Delta-Tech SpA including the fully owned subsidiary Delta-Preg SpA.
Delta-Tech SpA and Delta-Preg SpA
Delta-Tech SpA was founded in 1999 for products in the composite materials industry.
Delta-Tech product groups include:
fabrics: woven carbon, multi axial stitched carbon, woven glass…
UD tapes: HS carbon fiber, IM carbon fiber etc
Kordo: pre-formed edging system
SIMS: Semi-impregnated micro-sandwich, laminates based on the use of non-woven needle punched fabrics with micro-sandwich structures. Applications are automotive body panels and personal protection equipment
Delta-Preg SpA was founded in 2001 and manufactures textiles.
Pre-preg
Pre-Preg are pre-impregnated composite fibers with a matrix material such as epoxy.
Toray’s medium term management program “Project AP-G 2016” (from April 2014 to March 2017)
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
life science
other: analysis, research related services
Toray builds integrated supply chain in Europe
Through a program of acquisitions, Toray is building an integrated supply chain in Europe:
Delta-Tech SpA and Delta-Prepreg SpA
Saati SpA’s European carbon fiber fabric and prepreg business, renamed: Composite Materials (Italy) S.r.l., (CIT)
Alcantara S.p.A.: Trading activities, manufacture and marketing of ALCANTARA®, unique covering material
Toray Carbon Fibers Europe S.A. (CFE): polyacrylonitrile (PAN) precursor
Toray Films Europe S.A.S. (TFE)
Toray Textiles Central Europe s.r.o. (TTCE)
Euro Advanced Carbon Fiber Composites GmbH (EACC): Manufacture and marketing of CFRP parts and components for automobile
ACE Advanced Composite Engineering GmbH (ACE)
Toray International Europe GmbH (TIEU)
Toray Resins Europe GmbH (TREU): Import and sales of resin products
Greenery GmbH: Development, manufacturing, and sales of fuel cells and water electrolysis components
Toray Membrane Spain S.L. (TMSP): Marketing and consulting of water treatment membranes
Toray Membrane Europe AG (TMEu): Importing and Sales of RO membrane element, UF/MF hollow fiber membrane module, and submerged module of flat sheet membrane
Toray International U.K. Ltd. (TIUK): trading
Toray Textiles Europe Ltd. (TTEL): Weaving and dyeing of polyester filament textiles
“Mr. Suzuki didn’t want to be a VW employee, and that’s understandable” (Prof. Dudenhoeffer via Bloomberg)
Suzuki Volkswagen divorce: Volkswagen makes approx US$ 1.3 billion profit, Suzuki comes out more or less even
by Gerhard Fasol, All Rights Reserved. 18 September 2015, updated: 27 September 2015
Suzuki Volkswagen divorce. “Mr. Suzuki didn’t want to be a VW employee” (Prof. Dudenhoeffer via Bloomberg). What can we learn?
A smiling Martin Winterkorn and Osamu Suzuki (79 years old at that time) looking the other way celebrated their freshly agreed “comprehensive partnership” at a press conference in Tokyo on December 9, 2009. Friends of mine who attended this press conference told me later that the lack of communication between Martin Winterkorn and Osamu Suzuki was quite visible to the audience, and that they already then had doubts about the future of this partnership.
Its interesting to look at the faces of Mr Winterkorn and Mr Suzuki in Reuters’ photograph of the occasion – a beaming Mr Winterkorn, and Mr Suzuki looking away from Mr Winterkorn – avoiding Mr Winterkorn’s eyes.
Wall Street Journal reported, that Suzuki and Volkswagen would negotiate details of their “comprehensive partnership” sometime later weeks or months after the announcement. We now know that these negotiations did not lead anywhere, and were never concluded.
Reuters reports that at the press conference VW CEO Martin Winterkorn focused on his plan to overtake Toyota as the global No. 1 carmaker in 2018 or earlier, Suzuki being obviously meant as a step to achieve this target to overtake Toyota and become No. 1 globally. According to Reuters, Volkswagen sold 3.265 million cars in the first half of 2009, and Suzuki sold 1.15 million – if combined, if Suzuki would become Volkswagen’s subsidiary, this would be 4.42 million compared to Toyota’s 3.564 million.
Suzuki Motor Corp. CEO Osamu Suzuki is reported by Reuters to have emphasized that he wanted to clear up any misunderstanding: he definitely did not want Suzuki to become a 12th brand for Volkswagen, and he does not want other people to tell him what to do – in reply to the question if he could see a German CEO for Suzuki Motor Corporation.
Suzuki Volkswagen alliance
Suzuki Volkswagen alliance time line
9 Dec 2009: VW-CEO Martin Winterkorn and Suzuki-CEO Osamu Suzuki announced the “comprehensive partnership” at a press conference in Tokyo
9 Dec 2009: Suzuki transferred 107,950,000 treasury shares to Volkswagen AG, valued approx at 226,695,000,000 yen (= approx. US$ 2.3 billion)
Suzuki acquired a 2.5% voting stake in Volkswagen for US$ 1.13 billion
15 Jan 2010: VW purchased 19.89% of Suzuki shares for about € 1.7 billion
Sept 2011: Suzuki’s Board decides to terminate the partnership
18 Nov 2011: Suzuki gives notice to Volkswagen of termination of partnership, Volkswagen does not reply
24 Nov 2011: Suzuki files for arbitration at International Court of Arbitration of the International Chamber of Commerce (ICC) in London
30 Aug 2015: ICC Arbitration Court issues judgement and holds the termination of the partnership valid, orders VW to sell all Suzuki shares back to Suzuki, and orders Suzuki to pay damages for breaking the agreement
17 Sep 2015 8:45am: Suzuki purchases back 119,787,000 of its own shares previously owned by VW back via Tokyo Stock Exchange ToSTNeT-3 system for 460,281,547,500 yen (approx. US$ 3.9 billion)
26 Sep 2015: Suzuki announced the transaction to sell all 4,397,000 Volkswagen shares which Suzuki owns to Porsche Automobile Holding SE, completing the termination of the partnership and capital alliance with VW
No common language, colliding expectations and no “meeting of minds”
Much has been reported in the press about what went wrong with the Suzuki-Volkswagen alliance, and both parties obviously have a very different understanding of the development, and both sides will feel obliged to maintain confidentiality. The ICC arbitration is also confidential. Therefore it will be hard to establish the precise facts.
However, it is obvious, that from the start there was no “meeting of minds”.
Expectations were very different and on collision, and obviously were never discussed openly between VW and Suzuki at CEO level. Even if they had wanted to, without any common language any direct communication was impossible anyway between CEOs.
Suzuki apparently hoped to receive technology from Volkswagen, Suzuki is reported to have hoped for personnel support, workers from Volkswagen (?) – it is not clear to this author what Suzuki was planning to give in return. Suzuki apparently gave up on the hope to obtain Diesel engines from Volkswagen and in the end did so from Fiat, which Volkswagen claimed to be an infringement of the cooperation agreement, a view which seems to have been maintained by the ICC arbitrators.
It is obvious, that Volkswagen was aiming to acquire increasing stakes of Suzuki, and was aiming to make Suzuki a subsidiary under Volkswagen control. Volkswagen was particularly interested in Suzuki’s market position in India via Maruti Suzuki India Limited, and by Suzuki’s know-how in designing and producing cost-efficient small sized vehicles. Again its unclear what Volkswagen planned to give in return.
Reportedly, Volkswagen demanded to increase the holding of Suzuki shares to 33% to “facilitate technology transfer”.
In September 2011, Suzuki Motors’ Board of Directors decided to terminate the cooperation with VW, making Suzuki Volkswagen divorce unavoidable.
On 18 Nov 2011 Suzuki gave notice to Volkswagen of termination of the partnership, and asked for return of the Suzuki shares. Volkswagen held on to the Suzuki shares for the time being.
On 1 July 2011, Suzuki-CEO Osamu Suzuki chose to inform the world in great detail about his opinion and decisions about the relationship between Suzuki and “Wagen” (ワーゲン). This article is entitled “スズキとワーゲンの今とこれから （鈴木修氏の経営者ブログ）” (english translation: “Suzuki and Wagen now and the way forward” (Osamu Suzuki’s management blog)). Osamu Suzuki’s blog can be read here (may need Nikkei subscription).
Clearly, calling Volkswagen “Wagen” and “Wagen-san” already expresses Osamu Suzuki’s frustrations very clearly. We are not sure, but most likely Volkswagen CEO and top management probably read this blog a few days later once it was translated by VW’s Japanese staff.
With this blog article it was unmistakably clear to the world that the Suzuki-“Wagen” cooperation had been broken down without any possibility for repair, and makes the Suzuki Volkswagen divorce public.
Professor Ferdinand Dudenhoeffer, Director of the Center for Automotive Research at the University Duisburg-Essen according to Bloomberg, summarized: “Mr Suzuki didn’t want to be a Volkswagen employee, and that’s understandable”.
In the same article, Der Spiegel reports that in an unnamed VW Executive’s opinion, future acquisition of a majority of shares of Suzuki by VW has been agreed since the beginning of the negotiations: clearly exactly the opposite of Suzuki-CEO Osamu Suzuki’s public statements – pointing to a huge misunderstanding between both CEOs.
On 30 August 2015, Suzuki announced details of the arbitration in London and its result in a press notice.
According to Suzuki, Suzuki requested VW to terminate the alliance and the capital relationship, but VW apparently did not respond. Therefore, Suzuki gave notice on 18 Nov 2011 of the termination, and on 24 Nov 2011 Suzuki filed for arbitration with the International Court of Arbitration of the International Chamber of Commerce (ICC). Suzuki asked for termination of the agreement with VW, and to rule that VW should sell all Suzuki shares either directly to Suzuki, or to a third party determined by Suzuki.
One 30 August 2015, the ICC ruled:
Termination of Suzuki-VW Framework Agreement: Suzuki’s termination notice of 18 Nov 2011 is valid, and the alliance therefore ended on 18 May 2012.
Divestment of shares in Suzuki: VW must sell all shares of Suzuki either direct to Suzuki or to a third party nominated by Suzuki
Suzuki’s breaches of agreement: IIC found that Suzuki violated some parts of the Framework Agreement, and that damages to be paid by Suzuki to Volkswagen will be determined later.
Lessons to learn from the Suzuki Volkswagen divorce: communication & respect
“Comprehensive partnership” without meeting of minds does not work
Partnerships are hard when CEOs on both sides don’t have any language in common, thus can’t talk to each other
Hidden agendas destroy trust
Without trust partnerships don’t work
Processes and methods (e.g. acquisitions of minor players all over Europe) successful in Europe often don’t work in Japan
Partnerships without respect both ways don’t work
Renault and Carlos Ghosn show us how to build a Japanese-European car company alliance, Daimler (with Mitsubishi Motors) and Volkswagen (with Suzuki) show us how it does not work
Suzuki Volkswagen alliance: financial aspects
Volkswagen reportedly paid Suzuki 222.5 billion yen (= approx. US$ 2.5 billion) for 19.89% of Suzuki’s shares
Suzuki acquired a 2.5% voting stake in Volkswagen for US$ 1.13 billion
On December 9, 2009, Suzuki transferred 107,950,000 treasury shares to Volkswagen AG, valued approximately at 226,695,000,000 yen (= approx. US$ 2.3 billion)
On June 3, 2010, Suzuki announced the offer of additional shares to be issued by third-party allotment to Volkswagen AG to bring Volkswagen’s share up to 19.89% as follows:
3,660,000 newly issued shares
issue price 1755 yen per share
total proceeds = 6,423,300,000 yen (= approx. US$ 64 million)
Suzuki announced to use the funds received from Volkswagen as follows:
122,484 million yen (= approx. US$ 1.2 billion) for Research and development expenses focusing on environmentally friendly, next generation technology for automobiles
100,000 million yen (= approx. US$ 1 billion) Reduction of interest-bearing liabilities to improve financial position (corresponding roughly to the purchase costs of Suzuki’s 2.5% stake in Volkswagen)
Suzuki Volkswagen divorce: financial aspects
On September 17, 2015, Suzuki announced the acquisition of treasury shares in order to acquire the shares in Suzuki held by Volkswagen AG:
Suzuki acquired 119,787,000 Suzuki common stock shares
Total amount paid: 460,281,547,500 yen (US$ 3.9 billion)
Suzuki has more than 1 Trillion yen (US$ 8.3 billion) in cash, and paid for the share purchase in cash from cash reserves.
Volkswagen had informed Suzuki to have sold 111,610,000 shares corresponding to 19.89% of voting shares, corresponding to approx. 463 billion yen ($3.8 billion).
On September 26, 2015, Suzuki announced the sale of all 4,397,000 Volkswagen voting shares Suzuki owned to Porsche Automobile Holding SE
Suzuki sold 4,397,000 Volkswagen voting shares to Porsche Automotive Holding SE
Suzuki did not announce the sales value. At VW’s current (27 Sept 2015) share price of € 115.82, the total sale revenue is expected to be approximately € 509 million (= approx. US$ 570 million)
Completion of sale: Sept 30, 2015
Suzuki reports an extraordinary profit of YEN 36.7 billion (= approx US$ 304 million) on this sale.
Ignoring transaction costs, interest, opportunity cost, arbitration and legal fees etc. the balance looks as follows:
Volkswagen purchased the 19.89% stake in Suzuki for approx. US$ 2.5 billion and sold the same stake for approx. $3.8 billion, i.e. making approx. US$ 1.3 billion profit
Suzuki sold its 19.89% shares to Volkswagen for approx. US$ 2.5 billion, and now repurchased the same shares for approx. $3.8 billion. In parallel, Suzuki purchased 2.5% of Volkswagen voting shares for approx. US$ 1.13 billion. Thus Suzuki overall, theoretically, made a small loss of approx. US$ 30 million on these transactions plus may have to pay damages to VW for breach of contract to be determined later by ICC.
Purely financially, Volkswagen made approx. US$ 1.3 billion profit on this transaction, while Suzuki came out more or less unchanged except for the damages Suzuki may have to pay to Volkswagen.
Suzuki Motor Corporation (スズキ株式会社) – slogan: “Small Cars for a Big Future”
In FY2014, Suzuki sold 750,000 cars in Japan and 1,170,000 cars in India
Suzuki Motor Corporation (スズキ株式会社) was founded by Michio Suzuki (鈴木道雄) (18 Feb 1887 – 27 Oct 1982) in October 1909 as Suzuki Type Machine Manufacturing Workshops (鈴木式織機製作所) in Hamamatsu, Shizuoka-ken.
On 15 March 1920 Suzuki-type Machine KK (鈴木式織機株式会社) was founded, and renamed to Suzuki Motor Engineering KK (鈴木自動車工業株式会社) in June 1954. In October 1990, the company was renamed to today’s name: Suzuki Motor Co Ltd (スズキ株式会社).
Suzuki’s international business includes:
Maruti Suzuki India Limited (マルチ・スズキ・インディア)
Magyar Suzuki Corporation (マジャールスズキ)
Changan Suzuki (長安スズキ)
P.T. Suzuki Indomobil Motor (スズキ・インドモービル・モーター)
In FY2014, Suzuki sold:
750,000 cars in Japan
1,170,000 cars in India
however, in 2012 decided to end car sales in the USA
Maruti Suzuki India Limited (マルチ・スズキ・インディア) – slogan: “Way of Life!”
Sanjay Gandhi first tried to cooperate with Volkswagen, cooperation attempts with Volkswagen failed, leading to cooperation with Suzuki
On 16 Nov 1970, the company ‘Maruti technical services private limited’ (MTSPL) was founded by the Indian Government to lay the foundation for an Indian automotive industry, and Sanjay Gandhi was the first CEO.
Sanjay Gandhi contacted Volkswagen AG to seek a cooperation or joint-venture to produce an Indian version of the VW Käfer (Beatle). However, a cooperation with Volkswagen did not work out. The company failed in 1977, and was reborn as Maruti Udyog Ltd by Dr V. Krishnamurthy.
In 1982, Maruti Udyog Ltd and Suzuki entered into a licensing and joint venture agreement, which has developed very well into India’s largest automotive company: today’s Maruti Suzuki India Limited (マルチ・スズキ・インディア).
publicly traded (BSE: 532500, NSE: MARUTI)
Market capitalization: 1.33 trillion Indian Rupees (US$ 20.23 billion) (as of Sept 18, 2015)
Market share in India: approx. 37% (2012) – 45% (2014) of India’s passenger car market (45% for 2014 according to Nikkei Business Online)
6900 employees
Suzuki ownership: increased from 26% to 40% in 1987, increased to 50% in 1992. Currently Suzuki owns 54% of Maruti Suzuki.
Hitachi received orders for 866 Intercity Express Program (IEP) carriages and for 234 carriages for Abellio’s ScotRail program, following 174 “Javelin” carriages
Hitachi Rail putting competitive pressure on Europe’s rail established rail manufacturers: Hitachi Rail has “on time delivery” at the top of the list of commitments to customers
Earlier in 2004, Hitachi received an order for 29 6-car high-speed Class 395 “Javelin” trains (a total of 174 carriages), which went into regular service on 30 December 2009 on the Integrated Kent Franchise, between London St. Pancras Station and Ashford International Station, traveling this approx. 100km distance in 37 minutes, an average speed of 162 km/h.
For a background of the international business aspects of Hitachi, read an essay by the emeritus Chairman of Hitachi Europe, and emeritus Board Member of Hitachi Ltd. Sir Stephen Gomersall.
Hitachi Rail to challenge European rail manufacturers Siemens and Alstom
Europe is one of the world’s biggest rail markets, and has a number of established rail manufacturers including:
There has been a series of recent problems in Europe’s established rail industries, which may have contributed to Hitachi’s considerable business success in Europe:
the failed and abandoned Fyra high-speed service between Amsterdam and Brussels using AnsaldoBreda V250 trains, which resulted in an avalanche of legal issues between the Governments, the rail operators, and the train manufacturers.
Rail in Europe and in Japan are very very different stories
European rail services are predominantly owned, operated and controlled by Government agencies, and to some extent operations are contracted out for limited periods to private service operators, almost none of Europe’s rail services are fully privately owned and operated – a rare and very successful exception is the Jungfraubahn mountain railway.
Rail services in Japan on the other hand are largely owned and operated by a large number of private railways companies, most of which are very successful and profitable and growing and listed on the stock exchange.
Thus Hitachi Rail is used to satisfying the tough needs of very competitive and privately owned commercial rail operators, while Europe’s rail manufacturers to a large extent sell to Government controlled agencies, or directly to Governments, or under Government programs, such as UK’s Intercity Express Programme (IEP).
The Hitachi investment in context: maybe we see a shift in investment value from traditional manufacturing to intellectual business such as insurance and pharmaceutical research
Compare Hitachi’s £82 million (= approx US$ 130 million) with the recent acquisition of UK insurance company Amlin by Mitsui Sumitomo Insurance Company for £2.5 billion (approx. US$ 3.85 billion or ¥642 billion), or the acquisition of Cambridge/UK Heptares Therapeutics Ltd by the Japanese Sosei Group for US$ 400 million (US$ 180 million in cash plus up to US$ 220 million in incentives).
Of course we are comparing apples and oranges here, and the overall Intercity Express Programme (IEP) is on the order of £ 5.8 billion ($ 10 billion), but we may witness here a shift of investment value from traditional manufacturing to intellectual business such as insurance and pharmaceutical research here.
More about Japan’s electronics and electrical machinery industries
Report on Japan’s electronics industry sector (approx. 237 pages, pdf file)
Nikkei won the race. Axel Springer withdrew. £ 94 million made the difference.
by Gerhard Fasol
On July 23, 2015 at 15:13 (3:13 pm) British Summer Time, Pearson and Nihon Keizai Shinbun Corporation announced the sale of the Financial Times Newspaper to Nihon Keizai Shinbun Corporation for £ 844 million (approx. US$ 1.3 billion) – sending shock waves around the global news industry.
FT: £ 94 million made the difference.
The Financial Times reported that Germany’s Axel Springer Verlag had offered £ 750 million in cash, but within the last 5 weeks Nihon Keizai Shinbun Corporation (Nikkei) quickly closed the acquisition with a 12% higher cash offer of £ 844 million, while Axel Springer withdrew. So it seems that in the end £ 94 million made the difference.
As a privately held company, Nihon Keizai Shinbun Corporation can act faster, and has far less constraints than the publicly traded Axel Springer Corporation.
Clearly in the best case, this acquisition will help Nikkei Inc to globalize and to bring Japan’s financial news and scoops via Financial Times to Western audiences, and vice-versa, and help both to learn from each other to speed up and expand the transition from paper to new digital business models.
Cultural issues and language issues: for effective cooperation, Financial Times leaders will need to learn Japanese and/or Nihon Keizai Shinbun leaders will need to learn much more English….
Writing news is an intensely intellectual activity. There will be interactions between Nikkei’s almost 100% Japanese reporters and Financial Times’ much more diverse creators. Given that almost zero of Financial Times’s staff speak any Japanese, and that knowledge of English language by Nikkei’s creators and editors is extremely limited, these interactions will be necessarily very limited, and will need intense efforts to expand. As you know, learning Japanese for Western people, and learning English for Japanese people is extremely difficult, especially at the level of writing compelling news to short deadlines and for some of the world’s most clever and demanding audiences – who are always able to defect to a Bloomberg terminal or to a news startup – or from this autumn to Apple-News.
Success of this acquisition is possible and could bring great benefits, but is by no means guaranteed.
Much has been written about editorial independence, separation of content creation vs advertising, and differences in editorial style and aggressive reporting between Financial Times’ aggressive London style vs Nikkei’s more obedient Tokyo style. Surely both can learn from each other!
Note also that the acquisition is subject to “regulatory approval”, and this may well impose conditions on the acquisition.
Another issues of course is, who did NOT acquire the Financial Times: Bloomberg seems to have not been involved, and Axel Springer seems to have withdrawn.
It has been reported, that Pearson is currently also in the process of selling Pearson’s shares in the iconic Economist Group. Following the Financial Times acquisition by Nikkei which has been conducted low profile, we can expect much more participation in a potential Economist sale.
Pearson only owns 50% of The Economist, the remainder is owned by Families (Cadbury, Rothschild, Schroder, Agnelli and others) and Economist staff and former staff.
The Economist is governed by:
Trustees:
Baroness Bottomley of Nettlestone
Lord O’Donnell
Tim Clark
Bryan Sanderson
Board of Directors of 12 people
Therefore The Economist’s government structure enables The Economist’s independence, and acquiring Pearson’s 50% will not allow control of The Economist in the way acquiring 100% of Financial Times does.
How big is Nikkei? 6 times larger circulation than Financial Times! Larger than New York Times + Wall Street Journal combined!
Nihon Keizai Shinbun (Nikkei) has substantially larger distribution than Wall Street Journal, New York Times or Financial Times
Japan’s media sector is very very large, and so is Nihon Keizai Shinbun Corporation.
Nihon Keizai Shinbun Corporation is best known in the west for the NIKKEI index, however this is only a very small part of Nihon Keizai Shinbun Corporation. At the core of Nihon Keizai Shinbun Corporation (Nikkei Inc) is the Nihon Keizai Shinbun (= Japan Economics Newspaper, Nikkei), which appears twice daily, and in terms of circulation is very much larger than New York Times, Wall Street Journal or Financial Times:
Circulation
Nikkei: 2.77 million (morning) + 1.39 million (evening) + 0.43 million (digital) = 4.59 million
WSJ: 1.463 million (paper) + 0.734 million (digital) = 2.2 million
NYT: 0.868 million (paper) + 0.91 million (digital) = 1.8 million
FT: .225 million (paper) + .504 million (digital) = 0.73 million
Thus, Nikkei’s circulation is larger than WSJ + NYT combined, or more than 6 times larger than Financial Times’.
However, Nikkei is clearly behind in the transition from paper to digital.
Financial Times, 1/4 the size of the Nikkei Corporation in terms of sales
The Financial Times was founded on January 9, 1888.
Financial Times Group sales have increased from around £ 400 million (approx. US$ 620 million) in 2010 to around £ 450 million (approx. US$ 700 million) in FY 2013.
Nihon Keizai Shinbun Corporation (株式会社日本経済新聞社, Nikkei Inc.) was founded on August 11, 1911, but goes back to the newspaper ChuugaiBukkaShinpou (中外物価新報) which started on January 27, 1889, almost exactly one year after the Financial Times was founded.
Nihon Keizai Shinbun Corporation has the Nihon Keizai Shinbun (日本経済新聞) as its core, but owns and operates a very large number of other publishing and media businesses, including also a 31.46% holding in Televi Tokyo Holdings, one of Japan’s major TV based media groups.
Consolidated revenues: YEN 300.6 billion (US$ 2.4 billion) (FY2014)
Operating income: YEN 16.7 billion (US$ 0.135 billion) (FY2014)
Net income: YEN 10.26 billion (US$ 0.08 billion) (FY2014)
Employees: 7319 (Dec 31, 2014)
You need to understand Japan’s huge media industry sector?
Read our report on Japan’s Media (approx. 200 pages, pdf file)
TOSHIBA sells KONE holding – fall-out from Toshiba’s accounting issues
Toshiba
TOSHIBA sells KONE holding: In the wake of Toshiba’s accounting issues, Toshiba announced the sale of its 24,186,720 shares, corresponding to a 4.6% holding in Finnish elevator company KONE for EURO 864.7 million (YEN 118 billion, US$ 0.95 billion).
TELC has sales of approx. YEN 120 billion (US$ 1.2 billion) per year, and employs about 4700 people.
KONE
KONE was founded in 1910. KONE’s annual sales are on the order of EURO 7 billion, and KONE employs about 47,000 people. KONE’s shares are listed on NASDAQ OMX Helsinki Exchange.
acquired London based virtual fitting room mannequin venture Fits.me
Rakuten, Japan’s largest e-commerce + e-finance group, is acquiring many companies around the world both to acquire technology, and to acquire e-commerce capabilities outside Japan in order to globalize. Find some of Rakuten’s recent acquisitions in Europe listed here: http://eu-japan.com/?s=rakuten
On July 13, 2015 Rakuten acquired London based virtual fitting room venture fits.me, both to acquire technology and we assume, also to contribute to Rakuten’s globalization.
Fits.me – virtual fitting room, robot mannequins, and fit advisor
Fits.me was founded in 2010 by two Estonian friends, Paul Pällin and Heikki Haldre, in Estonia, and in 2012 the company moved its headquarters to London.
Fits.me helps consumers visualize how they might look like dressed with clothes from an e-commerce site, and turning around, Fits.me allows e-retailers to collect data about their potential customers.
Fits.me offers a number of service versions ranging from “virtual fitting rooms” to “fit advisors”.
Once the customers has entered his/her body dimensions, weight and other data, Fits.me’s web mannequins represent the customer’s body dimensions, and show how selected clothing would look like on a web mannequin with the customer’s body data.
Fits.me received US$ 14.3 million in founding in three rounds:
Seed: US$ 1.8 million (Sept 22, 2010)
Estonian Development Fund
Series A: US$ 7.2 million (April 17, 2013)
Conor Venture Partners
Entrepreneurs Fund
Fostergate Holdings
SmartCap AS
Venture: US$ 5.3 million (Oct 24, 2014)
Entrepreneurs Fund
SmartCap AS
James B Gambrell
Total = US$ 14.3 million
Rakuten
Rakuten was founded by Hiroshi Mikitani, and is Japan’s leading e-commerce and e-finance company developing a global footprint through a long series of acquisitions around the globe. Find some of Rakuten’s recent acquisitions in Europe listed here: http://eu-japan.com/?s=rakuten
Nidec acquires German pump manufacturer Geräte- und Pumpenbau GmbH Dr. Eugen Schmidt via the subsidiary Nidec Motors & Actuators (Germany) GmbH (“NMA(G)”) on February 2, 2015.
Geräte- und Pumpenbau GmbH Dr. Eugen Schmidt and subsidiaries have been renamed:
Nidec continues acquisitions in Europe in the motor and electrical equipment sector
Nidec: “for everything that spins and moves”
Nidec acquired the Italian electrical machinery construction and repair company Motortecnica s.r.l. on May 15, 2015 via its Italian subsidiary Nidec ASI S.p.A. (formerly, Ansaldo Sistemi Industriali S.p.A), which Nidec had acquired in May 2012.
Motortecnica s.r.l.
Motortecnica was established in 1989 in Salerno (Italy) by Antonio Iorio for the repair of electrical machines. Motortecnica has 77 employees and € 11 million in revenues for the fiscal year ending with December 31, 2014.
Motortecnica is focused on:
planning and production of electric machines such as motors and generators
construction of electric machine parts: stator coils, rotor coils, connections, whole rotors, whole stators
machining
diagnostics and repair of electric machines
Motortecnica moved to new headquarters in September 2013 workshops and factory includes:
Automatic brazing machine MPM 3000
CNC Machining units
Vertical lathes
Electric furnaces
Cut and skin
Impulse generators
Automatic Meter Zeiss
Alternating voltage generator 50 kV – 200 kVA
Ridgway Taping machine
Stator coil spindle-moulding machine
Roebel Transposition press
Instrumentation
Thermopresse
Laser cutter
Waterjet
Balancing machines maximum 30 tons
Motortecnica invests in equipment, technology and production and maintenance:
2008: € 1 million
2009: € 2 million
2010: € 2.5 million
2011: € 1.5 million
2012: € 1 million
2013: € 2 million
2014: € 1.2 million
Nidec ASI S.p.A. (formerly, Ansaldo Sistemi Industriali S.p.A)
industrial system automation and service with focus on the oil & gas, metals, renewable energy, marine and general industry sectors
nidec (日本電産株式会社)
Nidec was founded in 1944 in Kyoto by Nagamori Shigenobu, and produces motors, machinery, optical parts, camera shutters and other electro-mechanical equipment.
Read our report on Japan’s electronics industry sector to learn more about NIDEC and its place in Japan’s electronics industry sector:
The GROHE Group owns 72.3% of Joyou AG, thus Joyou AG became a LIXIL subsidiary in January 2014. Joyou AG had an IPO at the Frankfurter Stock Exchange in 2010.
Joyou AG recently filed for bankruptcy, and on June 3, 2015, LIXIL announced a restatement of accounts and projections, reducing income statements.
LIXIL announced income reductions due to the Joyou AG bankruptcy filing:
FY 2013 (ending March 31, 2014) net income reduced by: YEN 23.8 billion (US$ 191 million)
FY 2014 (ending March 31, 2015) net income reduced by: YEN 9.4 billion (US$ 76 million)
FY 2015 (ending March 31, 2016) net income reduced by: YEN 33 billion (US$ 26.5 million)
Total net income reductions (net losses): YEN 66.2 billion (US$ 532 million)
LIXIL plans to increase international business to half of its sales, and these losses represent a setback for LIXIL’s globalization plans – one of Japan’s new companies striving to overcome Japan’s “Galapagos effect”.
LIXIL
Lixil Corporation (“Link to Good Living”), TSE-Code 5938, manufactures building materials and housing equipment and operates home and home building centers.
LIXIL was formed on April 1, 2011 by the merger of:
Tostem Corporation
Inax Corporation
Shin Nikkei Company, Ltd.
Toyo Exterior Co., Ltd.
Sun Wave Corporation
and has been growing aggressively through acquisitions with the target to achieve 50% sales internationally outside Japan. In particular, jointly with the Development Bank of Japan (DBJ) LIXIL acquired a 87.5% stake in the German GROHE Group in 2013, the American Standard Brands (ABS), and the Permasteelisa Group of Italy.
To become global leaders in building materials and housing equipment, LIXIL has recently acquired:
American Standard Brands (ABS), in August 2013 for US$ 542 million
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.
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.
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.
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%
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!
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%
Following acquisition of Adometry by Google and of Convertro by AOL
On May 28, 2014, Rakuten Marketing announced the acquisition of the Brighton (UK) based marketing attribution specialist DC Storm.
Although terms of the acquisition were not disclosed, Google on May 6, 2014 acquired Adometry for about US$ 150 million, and AOL on the same day acquired Convertro for US$ 101 million. Therefore we assume that Rakuten Marketing probably also paid on the order of US$ 100 million for DC Storm.
Marketing attribution: measuring return (ROI) on marketing investment
Marketing attribution has its origin in the work of Austrian psychologist Fritz Heider‘s work on Attribution Theory, and his seminal work “The Psychology of Interpersonal Relations” of 1958.
Attribution is the process by which people explain the causes for actions, and models for these processes (source: Wikipedia).
Marketing attribution develops understanding of which combination of events leads individuals to take particular actions, e.g. to conclude a purchase for example (source: Wikipedia Attribution (marketing))
Marketing attribution specialist companies have recently been very popular acquisition targets:
Convertro (about 60 employees) acquired by AOL for US$ 101 million, announced on May 6, 2014
Adometry (about 130 employees) acquired by Google for an estimated US$ 150 million, announced on May 6, 2014
DC Storm acquired by Rakuten Marketing, announced on May 28, 2014
DC Storm is headquartered at Brighton, UK, with offices in US and in Germany. DC Storm was founded in 2004 by current CEO, Seth Richardson, who designed and coded the initial versions of DC Storm’s digital marketing analysis platform.
DC Storm offers digital marketing companies attribution tools, analysis and consulting services, and tag management.
On March 4, 2014 Dentsu announced further European investments in its quest to strengthen its global footprint: Dentsu acquires French mobile marketing agency Lesmobilizers SAS.
Lesmobilizers SAS – Mobile Applications Creators
Lesmobilizers SAS are a dedicated agency in design and development of mobile applications. The company was founded in March 2010 in Paris, France, and employees about 10 people.
In the year ending December 2012, gross profits were about EURO 0.8 million.
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.
Tokyo AIM: LSE sells its share in the Tokyo AIM joint venture to Tokyo Stock Exchange and leaves Japan
Initially, London Stock Exchange and Tokyo Stock Exchange created Tokyo AIM as a joint-venture company in order to create a jointly owned and jointly managed Tokyo AIM, modeled according to the very successful London AIM model.
Nikkei: “Tokyo Stock Exchange has learnt enough from the London Stock Exchange to set up a similar market on its own”
However, on March 26, 2012 NIKKEI reported that “Tokyo Stock Exchange has learnt enough from the London Stock Exchange to set up a similar market on its own. TSE plans to improve the rules of its own new market, so that TSE can create a more welcoming market” (our translation of the original Japanese NIKKEI article to English).
London Stock Exchange withdrew from the venture, and Tokyo Stock Exchange took over 100% of Tokyo AIM. Essentially, London Stock Exchange AIM’s venture into Japan failed, while the stock market created by the venture continues without London Stock Exchange’s involvement. As explained in our blog here, these events are very very similar to what happened with NASDAQ about 10 years earlier!
Tokyo AIM is renamed TOKYO PRO Market and TOKYO PRO BOND Market
In 2012, the name was changed from Tokyo AIM, to TOKYO PRO Market and TOKYO PRO BOND Market. Details can be found here:
On January 20, 2014 Dentsu announced further European investments in its quest to strengthen its global footprint: Dentsu acquires Poland’s social media agency Socializer
Socializer SA
Socializer SA was founded in Warsaw, Poland, in March 2011, earned gross profits of UKL 1.7 million in the financial year ended December 2012, and employs about 130 people.
Socializer provider advertising and communications services using Social Media (SNS).
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.
Investment flow between EU and Japan shows strong impact from the Lehmann shock economic downturn. Investment flow from EU to Japan remains at relatively low levels around EURO 1 billion annually, while investments by Japanese companies in the EU are on the order of EURO 10 billion per year currently.
EU investments in Japan have been relatively constant around EURO 80 billion. There has been a marked reduction in EU investment in Japan in 2006 due to the withdrawal of Vodafone from Japan with the sale of Vodafone KK to Softbank for approx. EURO 12 billion (find details of the Vodafone-SoftBank M&A transaction here). This reduction of EU investment stock in Japan is clearly visible in the graphics below in 2006 and 2007.
Japanese investments in EU are steadily increasing, as Japanese companies are seeking to grow business outside Japan’s saturated market, and as Japanese companies acquire European companies for market access, technology and global business footprint. In 2012 the total investment stock of Japanese companies in the EU-27 has reached around EURO 150 billion.
Dentsu further expands the global footprint in Europe
Social, content and digital marketing empowerment based in Italy
On July 30, 2013 Dentsu announced another European investment this year in its quest to strengthen its global footprint: the acquisition of a 70% majority share in the Italian Simple Agency via Aegis Media Italia, a of subsidiary Dentsu Aegis Network Ltd.
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.
On May 23, 2013 Dentsu announced another European acquisition within the single month of May 2013 in its quest to strengthen its global footprint: the acquisition of the leading Dutch social media agency Social Embassy BV via its European subsidiary Dentsu Aegis Network Ltd.
Social Embassy BV
Social Embassy BV is The Netherlands’ largest social media agency, based in Amsterdam. The company was founded in 2008 by Steven Jongeneel and co-founder Niels van der Velden, and focuses on strategy & insights, content & community management, creative, brand engagement and advertising.
The company employed about 30 people when Dentsu acquired it.
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.
On May 14, 2013 Dentsu announced the acquisition of the Romanian digital advertising agency Kinecto via its subsidiary Dentsu-Aegis, based in London. Following the acquisition, the company was renamed Kinecto Isobar.
Kinecto
Kinecto International SRL is one of the most important digital advertising agencies in Romania, and was founded in 2002 by Dr Radu Ionesco and has about 10 employees.
The company focuses on online and social media campaigns, CRM programs, creative and production services for websites and micro websites, email marketing and search engine marketing
Before acquisition by Dentsu-Aegis, the company was part of the Tempo Creative Group.
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.
Hitachi Consulting announced on January 2, 2013 the acquisition of the UK based operations management consulting firm Celerant Consulting.
Caledonia Investments announced the sale of its 47.3% ownership in Celerant Consulting for around 47.7 million pounds (US$ 68 million). Therefore we estimate that the full acquisition price of 100% of Celerant Consulting is around 92 million British Pounds (US$ 145 million).
Celerant Consulting
Celerant Consulting was founded in 1987 as Cambridge Management Consulting Limited by Ian P. Clarkson, and changed the name to Celerant Consulting Limited in May 2001. Headquarters are in Richmond (UK) and since December 31, 2012, Celerant Consulting Limited is a subsidiary of Hitachi Consulting Corporation.
Hitachi Consulting is part of the Hitachi Information & Telecommunications System Company (ITSC).
Hitachi is Japan’s largest electronics and electrical industry group. After about 17 years of stagnation, very low growth and very small profits, Hitachi was shell-shocked by approx. US$ 8 billion losses in FY2009 to embark on “Hitachi’s Smart Transformation”. Acquisition of Celerant Consulting is in line with Hitachi’s Smart Transformation, which includes a shift to profitable services and globalization.
Rakuten is aggressively globalizing in the face of intense competition by Amazon.com, and more recently Alibaba. As part of global growth, Rakuten is acquiring a string of e-commerce, e-book, online media, and software and service companies in Europe. Now Rakuten has started to build fulfillment logistics infrastructure in Europe to strengthen the backend of e-commerce.
On November 6, 2012, Rakuten announced the acquisition of logistics specialist Alpha Direct Services (ADS), based in Beauvais (France), from the previous owners:
Alpha Direct Services (ADS) was founded in 2002 by Adrian Diaconu based on the acquisition of the French book club enterprise “Grand Livre du Mois”, with annual sales of € 3.5 million (US$ 4 million).
ADS offers a global value chain:
front-end websites
order management
receipt of products
storage, warehousing
order picking
fulfillment delivery, shipping (BtoB and BtoC)
reverse logistics
customer relationship management (CRM)
Adrian Deacon developed Alpha Direct Services (ADS) into a mail order, e-commerce and multi-channel logistics company.
Alpha Direct Services (ADS):
490 employees
storage surfaces: total 130,000 square meters
inventory: 2 million products
24 million packages shipped/year
180 active clients
Alpha Direct Services (ADS) growth:
2007: acquired Evreux logistical unit
2013: acquired Moissy-Cramayel logistical unit
2014: 13,000 square meter extension of Beauvais logistical unit
