Selling ARIAKE U.S.A. to Kerry and leaving the American market (2018)

Why let go of a business that sells well

What stands out in this transfer is that it was not the tidying-up of a loss. ARIAKE U.S.A. earned an operating profit of about $13.6M (¥1bn) on sales of some $55M (¥6bn), and the price, around $183.5M (¥20bn), was three and a half times net assets. The reason given for letting it go was not current earnings but the competitive conditions ahead — substitution of liquid by cheaper powder, entry by large rivals, and increasing difficulty in sourcing raw material. That the buyer was an important customer can be taken as an indication of who valued the business most highly. It was a decision to sell while still earning, before the way of earning changed.

What followed, however, also shows that the withdrawal was not a verdict on North America as a market. Five years later, in 2024, the company placed a company of the same name in the same state of Virginia. What it had let go of was a heavy business carrying plants and a customer base; its interest in the market had not been folded up with it. Counting from the 1985 entry, the United States had been the company’s first overseas base for thirty-four years. To sell it cleanly once and go back in when needed — how far a management that rearranges its overseas footprint by capital efficiency stays consistent now that the founder’s generation has gone appears to rest on how the coming investments in China and ASEAN turn out.