Buying ITX — a second pillar larger than the first (2014)

Buying not to add scale but to move a strength

The heart of this acquisition lies less in the enlargement itself than in a judgement about which market Nojima’s own strength should be applied to. The company had put distance between itself and the war of attrition fought on price in electronics retailing, and it carried its own form — salaried employees serving customers — into mobile-phone selling, a floor that demands expertise. President Nojima’s remark that he “did not agonize over it” reads as the confidence of someone who had already identified the ground on which he could win. That the target was bigger than the buyer meant, if anything, a wider span over which to transplant that form.

That said, an acquisition of a company larger than yourself, funded by borrowing, carries the hazard of integration. Nojima has said it limits M&A to cases where it is confident it can raise quality and rebuild the acquired workforce’s culture in the course of integration. ITX passed that disciplined screen, and became the first success in a run that would continue through Nifty to Conexio. Buying not to chase scale but to relocate a strength — this single move fixed the pattern by which Nojima changed from a single-line electronics retailer into a diversified operating company.