Acquiring Pilkington outright for about ¥616 billion (2006)

A judgement made where there are only two options

At 20%, neither joint purchasing nor shared research worked, and yet the British rules imposed an obligation to acquire the whole company on anyone increasing a holding beyond 30%. When chairman Izuhara Yozo said that at 20% you should give up, and if you are going to do it you go to 100%, he was not declaring resolve; he was describing a condition in which only two moves were available. With a single overseas base, in Malaysia, there was no way to serve the overseas production of Japanese carmakers other than to obtain a set of plants in one go.

That there were only two options, however, does not mean the price of the one chosen was reasonable. The 165 pence settlement was a 30% premium on the share price just before the announcement, reached after raising the initial offer by 15 pence. Against roughly $1.9B (¥220bn) of goodwill, the integration effects the company projected came to $47M (¥4bn) a year — a calculation disclosed at the time of the announcement showing less than half the annual amortisation. That the rules forced a binary choice, and whether the company had the financial strength to see through the more expensive of the two, were separate questions.