Buying Shimachu — a leap into home centres (2020)

The homework left by a takeover battle won at a high price

The heart of this decision was that Nitori cut in later, at a higher price, on a target that had already agreed terms with DCM, and used its first large M&A to reach into a different retail format. The $52 (¥5,500)-a-share price and a five-year employment guarantee rested on a reading that layering Nitori’s products onto Shimachu’s selling power would recoup the cost with room to spare. Taking prime urban sites all at once had the effect of securing, in short order, locations that organic store openings would have taken years to assemble.

And yet the strengths honed on SPA did not transfer to a home centre as they were. Nitori’s competitiveness lies in an integrated system that plans and makes its own goods and sells them through in its own stores. Shimachu’s wide assortment — DIY, building materials, daily necessities — and Nitori’s method of narrowing prices around private-label goods differed in both customer base and buying behaviour. Goodwill impairment and losses, and the founder himself taking on a second role as turnaround chairman, mirror the truth that the wall between formats cannot be cleared by the size of a sum alone. A takeover battle won at a high price left its difficulty precisely for after the winning.