Consolidating Askul, and the governance of parent–subsidiary listing (2015)

The logic of completing logistics, and the manners of control

The core of this decision lay where two questions overlapped: the strategic one of how an e-commerce business that owns no logistics is to secure logistics, and the governance one of how far a parent that has brought a listed subsidiary under its control may reach into its management. Since building a nationwide logistics network from scratch would take far too much time and capital, there was a logic to taking Askul — already a partner in LOHACO — into consolidation. If Yahoo, holding customer acquisition and payments, embraced Askul, holding logistics and merchandise procurement, the two together should have been able to stand against Amazon-style retailing as one.

But the logic of completing logistics was a separate matter from the manners of control. When the conflict over LOHACO’s losses and the demand to hand it over reached the strongest form of intervention — the shareholders’ meeting voting down the reappointment of Askul’s president — what the market saw was the peril of parent–subsidiary listing, in which the parent’s will is put ahead of minority shareholders’ interests. How far may a controlling shareholder move the management of a subsidiary? The Askul affair became an occasion for Japan’s capital market to confront that question. Yahoo kept control of Askul, but the rightness of control and the logic of a logistics strategy never, in the end, settled into the same answer.