The ¥491.8bn buyout of Mitsubishi Tanabe Pharma (2019)

What became of the two-pillar idea

The essence of this decision was a question about how far to defend the configuration that had held since the holding company was founded: cushioning volatile petrochemicals with pharmaceuticals. A parent buying out a subsidiary whose earnings were thinning, at a 50% premium to the pre-announcement price, and delisting it in order to bind it in — the removal of the parent–subsidiary listing was in itself a coherent choice that made decision-making and financial support more mobile. But given that what was being absorbed was pharmaceuticals, a structurally expensive business, taking full ownership also meant bringing the source of the earnings deterioration inside the family. The colouring of an acquisition driven by a sense of crisis was, at the time, hard to wipe away.

What followed shows how difficult it is for a chemical company to keep holding a business as alien as pharmaceuticals. The pillar taken in at vast expense was entrusted to a fund for about ¥510bn within five years, and the idea of levelling earnings across two pillars receded into the background. One decision gets rewritten into its opposite by the same management — and what separated the acquisition from the sale was, presumably, how far the word "synergy" actually reached into real profit. For an integrated chemical group that raised a two-pillar banner, the question of what to own and what to let go appears to be still running.