From organic growth to majority stakes — Maruishi Chemical Products, Daigo Tsusho and Novacel (2024)

What lies beyond becoming a company that buys

What stands out about this decision is that the buying did not follow bad results. Inabata had just posted a third consecutive record year when the president said in his own words that growth under its own steam would not reach the long-range vision, and set out a capital-allocation framework in numbers for outsiders to see. It is no small thing for a company doing well to call its own growth model insufficient. Daigo Tsusho and Maruishi Chemical Products, both in 2023, were cases of raising a stake in a company whose shares Inabata already partly held — not of walking up to a stranger and buying it. That looks characteristic of a president, Inabata Katsutaro, who has described sorting out affiliated companies as his hardest test: expand from the relationships already at hand.

The remaining question has shifted to how well the purchases mesh. Novacel contributed about $79.2M (¥12bn) of sales and a little over $6.6M (¥1bn) of profit in its first year, but what the president said he wanted from it was not the figures — it was synergy with the existing compounding business. On the food side, acquisitions continue beneath Daigo Tsusho, while rebuilding the Life Industry segment remains unfinished. A company that decided in 1978 to own factories despite being a trading house has, forty-five years later, turned to buying whole companies instead. How to combine the power to sell with the power to make is a question Inabata has not finished answering.