Buying the American Mentholatum Company: owning the source of a borrowed brand (1988)

To own rather than to borrow

The heart of this decision was answering, on the side of ownership, a two-way choice: leave the rights to a brand it had grown in another company’s hands, or own the source outright and take back sovereignty over it. Royalties swelled in proportion to sales, and every renewal reopened the terms; for as long as it was borrowing, the premise of the business always lay in the other party’s grasp. Rohto bought the source company knowing it meant higher costs in the short run, and took manufacturing, sales and the trademark together in one hand. From a right to use to a right to own — the 1975 decision to take only the brand rather than buy the company was here turned over and raised into a decision to acquire the company entire.

Ownership, though, was no cure-all. What was inside the company it had bought fell short of expectations, and the burden of integration — a firm of some five hundred employees now running an overseas business — was far from small. Even so, without this first full-scale overseas acquisition Rohto would have had neither its expansion into China and the rest of Asia under the Mentholatum banner nor the discretion to set prices and products itself. To borrow and defend, or to own and attack — Rohto chose to attack, and in this single episode carved into itself the template for the global expansion and the M&A that would follow.