Buying Fujitsu Electronics for ¥20.5 billion to build a ¥500 billion group (2018)

What the price tag did not include

¥20.5 billion is on the cheap side as consideration for a company larger than the buyer. In the year to March 2018 Fujitsu Electronics had thinned to ¥258.7 billion of sales on ¥2.6 billion of operating profit, and the price reflected that earning power. What Kaga Electronics bought was not profit but the old Fujitsu-group sales channels and some two hundred engineers who understood the path from design to volume production. It was a choice to deliver the “number one in the industry” of its mid-term plan through somebody else’s customer list rather than its own sales force.

What actually arrived was smaller than expected. In the year after the deal, Fujitsu Electronics’ sales fell from about ¥230 billion to about ¥130 billion. Distribution rights with suppliers are not the kind of asset a purchase agreement can guarantee, and the former parent’s own restructuring could not be stopped. That Kaga Electronics’ consolidated sales nonetheless reached ¥608.1 billion in the year to March 2023 was because the engineers who came with the deal went out and found replacements for the ¥100 billion that had vanished. The ¥20.5 billion price tag did not include those four years of work.