Taking Sofmap in stages, then fully (2005)

Why it did not buy at once, but deepened its grip over five years

The heart of this decision was dividing the acquisition into stages. Bic Camera moved from a capital and business alliance and the largest shareholding in 2005, to a majority through a share subscription in 2006, to full ownership by share exchange in 2010 — five years of steadily deeper involvement. Behind it lay Sofmap’s deteriorating performance under Marubeni’s ownership: Bic Camera entered as largest shareholder partly as a rescue and added to its stake as it read the target’s results and risks. For a company selling new appliances and cameras in major cities, a customer base built on used PCs, trade-ins and Akihabara was not something it could have created itself, and it chose to take in the specialist know-how along with the business.

Securing Sofmap’s appraisal systems and buy-back network before used and reused goods became a growth area in retail led on, later, to the acquisition of Jumpara. How far should a retailer bring the “sell and buy back” market that sits on the reverse side of replacement demand into its own trade? Taking Sofmap in stages answered that question early while using the moment of a partner’s weakness to spread the risk over time.