The ~¥1 trillion acquisition of GlobalLogic (2021)

A yardstick that overrides the “overpriced” verdict

The core of this acquisition lies in the question of which yardstick to measure the amount’s reasonableness by. A price of ten times revenue cannot escape a verdict of overpriced if only financial indicators are seen. That a board on which outside directors held the majority pressed exactly that point and pushed the executive to reconsider shows that the governance reform Hitachi advanced early was not merely a form. That what overrode the objection was not the chairman’s personal passion but the presentation of another yardstick — whether transformation was possible — is the distinctive feature of how this was settled.

That said, replacing the yardstick does not, by itself, create a guarantee that the investment will be recovered. Hitachi has the experience of once buying IBM’s hard-disk business for a large sum and letting it go within a few years. Whether GlobalLogic follows the same rut, or instead makes the turn into a digital company something certain, hangs on how far the Lumada 80-20 target is realized. It can be seen as an acquisition that deliberately entrusted the verdict — buying high or seeing ahead — to future results.