Acquiring and rebuilding Sankyo Seiki (2003)

An acquisition as the receiver of an industry shakeout — its meaning and its weight

The heart of this decision was neither price nor scale but the fact that it took in a sunken rival rather than crushing it. Sankyo Seiki had challenged Nidec on the same ground — the fluid dynamic bearing (FDB) — and stalled under the weight of its own investment. Instead of knocking it down, Nidec revived it through cleaning and by preserving employment, and folded it into its own camp as Nippon Densan Sankyo. Under Nagamori’s reading of an industry that held too many companies and was slow to shake out, Nidec volunteered itself as the receiver for the reorganisation. A trend of large corporations letting go of underperforming subsidiaries was what made the deal possible.

Yet the FDB motor that served as the foothold for the rescue stood on the foundation of the HDD. So long as the hard disk grew as the storage device of PCs and servers it was a strength, but if the recording medium eventually shifted to another technology, the weight of that base would change too. Reviving a rival whole thickened Nidec’s precision-equipment business, but it was also a choice that added one more operation still swayed by the rise and fall of a mainstay product. The rebirth of Sankyo Seiki can be read as a way-station within the larger current of extending the next pillar into automotive and home appliances.