Acquiring Midori Denka to build the number-two chain (2005)

Assembling scale, and earning from it

Read as one more alliance in pursuit of size, this deal is misread. What Edion chose was not the loose joint-purchasing group but full ownership by share exchange. That it went so far as to acquire and retire the holding of the chairman who would otherwise have become its largest shareholder shows the intent: to bring the chain of command under one head. Behind the fact of reaching ¥714.6bn consolidated and second place nationally, Kubo Nobutaka can be seen prioritising the certain binding of three companies over the loose confederation of Voice Network that he had launched at the same time.

Converting the scale thus taken into earnings, however, had only begun when the deal closed. A federal structure in which each company kept its own administrative departments pushed up selling and administrative expenses, and the recurring margin stayed at a little over half of Yamada's. Second place in the rankings did not amount to second place in the ability to earn. The task of rebuilding a combination that existed on paper into a single company with one line of command was carried over to the integration that began in 2009. Acquiring scale and turning it into profit are two different jobs.