Nippon Sheet Glass Co.“s objective of realizing JPY 19 billion by fiscal 2013 from its acquisition of Pilkington Plc was attacked by stock market players on 6 July 2006 as being too far in the future…
Nippon Sheet Glass Co.“s objective of realizing JPY 19 billion by fiscal 2013 from its acquisition of Pilkington Plc was attacked by stock market players on 6 July 2006 as being too far in the future. The criticisms came during a briefing by NSG President Katsuji Fujimoto at the Tokyo Stock Exchange. NSG completed its JPY 600 billion takeover on 16 June 2006. “We expect to save JPY 4.4 billion in costs in the short term through the joint procurement of (some) materials”, Fujimoto said. Other benefits from the acquisition are likely to be higher revenue from joint sales, which are expected to come in four years, and improved competitivity through technology exchanges, likely to be seen in around seven years. Many market players were critical of these relatively long-term goals. “Synergy is usually seen soon after a consolidation”, argued an analyst from a domestic investment advisory company. “The benefits would be much larger if fixed costs were trimmed by integrating their bases”. “There is no evidence of strategies to nurture new businesses where they are lagging behind Asahi Glass Co., such as displays”, complained Nomura Securities Co. analyst Yuji Matsumoto. One bank analyst cited inadequate measures for cost cutting. Although Fujimoto promised more detailed strategies in the medium-term plans to be announced after summer 2006, analysts were unimpressed. “The plans will probably still be short on specifics”, Matsuda said.