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Business deals

Japan's M&A maestro lets deputies spearhead German acquisitions

Nidec boss Nagamori gradually loosens the reins

Chairman Shigenobu Nagamori plans to gradually hand over responsibilities. (Photo by Tsuyoshi Tamehiro)

OSAKA -- Nidec, one of Japan's most experienced players in mergers and acquisitions, has bought a German robot parts maker and added to its shopping list four other targets for this fiscal year. But what was different this time is that the plans have been led by subsidiaries and not M&A maestro Shigenobu Nagamori, the founder himself.

This exemplifies how the motor manufacturer's charismatic chairman is loosening his control over dealmaking and trying to pass on his expertise to group companies.

Nidec has concluded around 60 M&A deals since its 1973 founding. Most were spearheaded by Nagamori through parent Nidec. But this has started to change in recent years.

"We plan to step up purchases through subsidiaries," Nagamori has been saying as he looks to a leadership change. 

And subsidiary Nidec-Shimpo -- headed by one of Nagamori's most trusted deputies, whom he poached from a megabank -- will be a key presence in future automation-related deals.

It was Nidec-Shimpo that purchased MS-Graessner, a German manufacturer of speed-reducing gearboxes key to moving joints in robot arms. 

Run by President Tatsuya Nishimoto, who used to assist Nidec's acquisitions in his banker days, Nidec-Shimpo is also planning to buy four other German robot parts and machinery tool makers as the group seeks to tap growing global demand for factory automation.

Nidec is enjoying strong demand for gearboxes.

Nishimoto's thinking on M&A deals is similar to Nagamori's. Buying a manufacturer of devices necessary for press machinery will boost the company's profitability, as opposed to selling the machines alone, for example.

Targeting group sales of 2 trillion yen ($18 billion) in fiscal 2020, Nidec has been on a shopping spree and making billion-dollar deals to expand operations. It bought Emerson Electric's motor, drive and power generation businesses in 2017 and signed a deal this fiscal year for the Embraco compressor business of U.S. appliance maker Whirlpool.

Nagamori has visited factory floors at acquired companies to speak directly with workers wherever they may be -- in Europe, the U.S. or Asia. But traveling has become difficult, and the 74-year-old leader picked Hiroyuki Yoshimoto to succeed him as president starting this June.

Nagamori still insists on screening acquisition targets himself. But he is "delegating overseas trips" to Yoshimoto to implement post-merger integration work.

Nidec has granted a certain level of discretion and independence to subsidiaries to quickly execute acquisitions in a broad range of sectors. Going forward, subsidiaries will also start handling purchases in the factory automation and automotive businesses.

Nagamori is ensuring that his management style is passed down. His three-pronged M&A strategy of not paying top price, ensuring post-purchase involvement and generating synergies will inform the group's acquisition decisions. Nagamori is demonstrating his strategy of buying smaller companies with niche technologies via repeated acquisitions of less than 20 billion yen each.

Another right-hand man plays an essential part in the group's game plan. Turning idle smartphone parts production facilities of Nidec Seimitsu into Nidec-Shimpo facilities for gearboxes was the idea of Nidec Vice Chairman and Chief Technology Officer Mikio Katayama, a former president of Sharp.

Nidec aims to lift consolidated sales to 10 trillion yen by fiscal 2030. Bolstering subsidiary-led acquisitions and developing executives to lead post-purchase companies will be key to maintaining strong growth going forward.

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