Selling the chemicals business: the carve-out to VG Chemical (2012)

The decade of the side that was sold

To read this sale only as the shedding of a non-core division abandoned by its parent is to miss its centre. The chemicals business that was let go earned good margins, sold materials to outside manufacturers, and had always been a subsidiary with a strong streak of independence. If anything, falling outside the parent’s logic of capital allocation is what gave the company speed in its investment decisions. Asked in later years whether growth investment would have been decided more slowly had it remained a subsidiary, President Shinya Yoshihisa said it absolutely would have, and named decision-making speed as a reason for the revival.

Separation did not, however, guarantee recovery on its own. For several years after the 2015 relisting sales stagnated below $634.1M (¥70bn), and market capitalisation sank to roughly $385.3M (¥42bn) in March 2019. The tide turned only when the first president raised inside the company re-selected the product portfolio on ROIC, and the shift toward automotive uses coincided with the outside tailwind of pandemic demand. What the carve-out provided was no more than the precondition of independence; drawing earning power out of it required a different kind of management. The seller’s selection and concentration and the seller-off’s rebuilding were, over one and the same business, two separate questions.