The Firestone acquisition: a leap to world number one (1988)

How much to pay for a chance to globalize

The heart of this decision lies in Bridgestone’s answer — “$2.6 billion” — to the question of how much it was prepared to pay for a chance to globalize. In the contest with Pirelli the price swelled from $750 million to more than three times that, but to walk away here would have meant forfeiting the very opening into the American and European markets — so President Ieiri judged, and he agreed to raise the bid. It was a wager to seize in a single stroke a world-leading production base that building factories and a sales network from scratch could never have reached.

The price of the wager was the cost of replacing aging plant, years of losses, and the difficulty of integration. An operation that left the shop floor largely to the Firestone side resurfaced twelve years later, in the defective-tire crisis, as a weakness of consolidated governance. Even so, without this acquisition Bridgestone could never have built the base from which it now contends for the top of the world tire market. Whether a decision to buy proves right is settled by how deeply the buyer folds the target into itself afterward — the Firestone acquisition remains an early case that put that question to Japanese companies.