Selling the wig chain Fontaine to Aderans and returning to supplying artificial hair (1985)

The day the testbed was no longer needed

Fontaine existed so that Kanekalon could create its own applications. Of a material grown to $96.4M (¥23bn) in annual sales, wigs took only about a tenth; flame-retardant household goods and interiors had taken over as the leading uses. Once the role of testbed had thinned, Kanegafuchi Chemical handed Fontaine to a specialist. What it let go was not a failing business but one whose job was done. The criterion president Niiro Masato named — fields in which the company’s technology and management strength are hard to bring to bear — fits this case exactly.

Still, the business grew in the buyer’s hands, and that fact remains. Fontaine’s sales rose from around 1986, and nine years later it held some 30% of the market and went public over the counter. Against a transfer price estimated at a little over $4.2M (¥1bn), the buyer received 140 storefronts and the leading position that grew out of them. The downstream profit moved to the buyer. Whether Kanegafuchi Chemical, without people from the fashion trade, could have produced the same growth is unknowable — which is also why it cannot simply be said that it sold too cheap.