Taking on Fujiya’s rescue and consolidating it at 51% (2007)

When rescue and expansion are the same move

The character of this decision lies in the way rescue and expansion coincided in a single transaction. For a Yamazaki whose path to further scale in bread was blocked by antitrust law, a company holding both confectionery and Western-style cakes would ordinarily have been an expensive thing to buy — but scandal had put it on the side asking for help. Fujiya, for its part, was looking for a partner who would accept the condition that it be rebuilt without cutting the cake business loose. Out of the meshing of those two constraints came a staged involvement that began with technical support.

What Yamazaki took on, though, was not only plants and trademarks. It also assumed the heavy parts: the relationship with the founding family, the organisation’s habits, and a loss-making cake business. The first year dragged down consolidated profit, and the economics of the cake business remain an issue today. Even so, lending the sales force and logistics that reach mass merchandisers and convenience stores was a different kind of rescue from simply injecting money. Now that the question of unwinding the parent-subsidiary listing has been raised, what actually sustains this relationship is likely to be asked again.