Fifty-fifty with Honeywell — technology for equity (1953)

The price of being an equal

Against the proposal of 51%, President Yamaguchi held to fifty-fifty, saying that a management settled by cumulative voting would not make for a good partnership. There was a road on which he could have handed over control in order to obtain the technology; instead he put an equal capital structure ahead of it, as a precondition. And at the same time he pushed into the package contract the HVAC controls and microswitches that the other side was reluctant to include because Yamatake had no experience of them at all. The thinking — that even if we cannot build them yet, we can manage if we merely import and sell them — shows clearly the order of operations of a company that started out as an importer.

Equality, though, was partly a matter of form. Honeywell agreed to fifty-fifty while separately seeking a private undertaking that it would hold the exercising rights after Yamaguchi’s death — securing its control out of sight. That private agreement became a dead letter as mutual understanding deepened and was scrapped, but the equality of the starting point was not stable from the outset. Across the thirty-seven years in which the 50% shareholding lasted, Yamatake moved from acting as agent for imported goods to producing HVAC controls domestically. What insisting on equality meant can only be measured by whether the company could stand on its own once the alliance ended.