The share transfer that created Sojitz, and ¥266 billion of preferred shares (2003)

What actually set the size of the merger

The ¥200 billion was never explained, but the arithmetic can be reconstructed after the fact. If the ¥80 billion of cost cuts meant shedding 4,000 staff and 130 subsidiaries, then severance premiums and disposal losses would have added up to a figure the companies could have shown. What the banks were actually asked for, however, was allocated by loan exposure — ¥100 billion from UFJ, ¥60 billion from Mizuho Corporate — and by the following spring the issue had swelled to ¥266 billion. The scale of the merger appears to have been set not by the overlap between the two businesses but by the ceiling on what could be collected from the lenders.

That design did, nonetheless, keep Sojitz alive. Precisely because the ¥266 billion was new money rather than a debt-for-equity swap, no lender could accept an impairment of the same assets months after injecting it, and business carried on under the maxim that unrealised losses need never be realised. The price was ¥616 billion of preferred shares converting until 2024, and the cash flow consumed buying them back. The merger the press called a forced marriage kept two firms from failing at the time, and passed two decades of the bill to the managements that followed.