Buying America’s leading brand for $175m — an unprecedented move into North America (2001)

The pillar and the weakness an unprecedented acquisition brought

At the centre of this decision was acquisition as the fastest available means for a company that sold raw material through exports to become a company that sells products overseas. The time it would have taken to grow a local brand that commands shelf space, Nippon Suisan bought for $175m. In taking Gorton’s, the American leader, it gained a foothold in a North American consumer market that exports could never reach, and produced one answer to the task set in 1983 of becoming a comprehensive food manufacturer. One can see it as a fishing company strong in catching drawing, ahead of its peers, the route into making and selling.

Buying a brand and earning steadily from it, however, are different things. The acquired brands piled up on the balance sheet as goodwill and intangible assets, and became a factor that swung profit and loss with fish prices and exchange rates. The ¥16.2bn net loss of 2009 was the moment that fragility appeared all at once, and the subsequent shift toward “non-marine” and the review of the business portfolio were also the work of facing the earnings volatility this acquisition introduced. The unprecedented decision to buy America’s leading brand brought the company, at the same time, a new pillar in North America and a new weakness in goodwill and currency.