wsj_0583.xml

WSJ891030-0116 WSJ891030-0116 = 891030
= 891030
891030-0116 . 891030-0116 . International : @ Polly Peck of U.K. @ To Buy 51 % Stake @ In Japanese Firm @ ---- @ By Urban C. Lehner @ Staff Reporter of The Wall Street Journal International : @ Polly Peck of U.K. @ To Buy 51 % Stake @ In Japanese Firm @ ---- @ By Urban C. Lehner @ Staff Reporter of The Wall Street Journal 10/30/89 10/30/89
10/30/89
WALL STREET JOURNAL ( J ) WALL STREET JOURNAL ( J ) J.SNE J.SNE TENDER OFFERS , MERGERS , ACQUISITIONS ( TNM ) HOME ELECTRONICS , FURNISHINGS , APPLIANCES ( HMF ) TENDER OFFERS , MERGERS , ACQUISITIONS ( TNM ) HOME ELECTRONICS , FURNISHINGS , APPLIANCES ( HMF ) TOKYO TOKYO Polly Peck International Inc. 's agreement to acquire 51 % of Sansui Electric Co. proves that foreign companies can acquire Japanese companies -- if the alternative for the Japanese company is extinction . Polly Peck , a fast-growing British conglomerate , will pay 15.6 billion yen -LRB- $ 110 million -RRB- for 39 million new shares of Sansui , a well-known maker of high-fidelity audio equipment that failed to adjust to changing market conditions . Japanese government officials , eager to rebut foreign criticism of Japanese investments overseas , hailed the transaction as proof foreigners can make similar investments in Japan . Polly Peck 's chairman , Asil Nadir , echoed the official Japanese view of the accord , which was announced Friday . `` The myths that Japan is not open to concerns from outside has , I think , been demolished at a stroke , '' Mr. Nadir said . But analysts say Sansui is a special case . It expects to post a loss of 6.4 billion yen for the year ending tomorrow and its liabilities currently exceed its assets by about 13.8 billion yen . `` If you find sound , healthy companies in Japan , they are not for sale , '' said George Watanabe , a management-consultant at Tokyo-based Asia Advisory Services Inc . Statistics on acquisitions by foreigners vary in detail , because unlike Sansui , which is listed on the Tokyo and Osaka stock exchanges , most of the Japanese companies acquired by foreigners are privately held . But by all accounts foreign companies have bought only a relative handful of Japanese companies this year , while Japanese companies have acquired hundreds of foreign companies . Nor do analysts expect the Sansui deal to touch off a fresh wave of foreign purchases . If the strong yen and the high stock prices of Japanese companies were n't deterrents enough , webs of cross-shareholdings between friendly Japanese companies and fiercely independent Japanese corporate attitudes repel most would-be acquirers . Usually when a Japanese company is ready to sell , it has few alternatives remaining , and the grim demeanors of Sansui 's directors at a joint news conference here left little doubt that this was not the company 's finest hour . Sansui was once one of Japan 's premier makers of expensive , high-quality stereo gear for audiophiles . But in recent years , the market has moved toward less expensive `` mini-component '' sets , miniaturized amplifiers and receivers and software players that could be stacked on top of each other . Some of Sansui 's fellow audio-specialty companies , such as Aiwa Co. and Pioneer Electric Corp. , responded to the challenge by quickly bringing out mini-component products of their own , by moving heavily into the booming compact disk businesses or by diversifying into other consumer-electronics fields , including laser disks or portable cassette players . Sansui was late into the mini-component business and failed to branch into other new businesses . As the yen soared in recent years , Sansui 's deepening financial problems became a vicious circle . While competitors moved production offshore in response to the sagging competitiveness of Japanese factories , Sansui lacked the money to build new plants in Southeast Asia . `` Our company has not been able to cope very effectively with '' changes in the marketplace , said Ryosuke Ito , Sansui 's president . But even a Japanese company that looks like a dog may turn out to be a good investment for a foreign concern , some management consultants maintain . Yoshihisa Murasawa , a management consultant for Booz-Allen & Hamilton -LRB- Japan -RRB- Inc. , said his firm will likely be recommending acquisitions of Japanese companies more often to foreign clients in the future . `` Attitudes -LCB- toward being acquired -RCB- are still negative , but they 're becoming more positive , '' Mr. Murasawa said . `` In some industries , like pharmaceuticals , acquisitions make sense . '' Whether Polly Peck 's acquisition makes sense remains to be seen , but at the news conference , Mr. Nadir brimmed with self-confidence that he can turn Sansui around . Sansui , he said , is a perfect fit for Polly Peck 's electronics operations , which make televisions , videocassette recorders , microwaves and other products on an `` original equipment maker '' basis for sale under other companies ' brand names . He said Polly Peck will greatly expand Sansui 's product line , using Sansui 's engineers to design the new products , and will move Sansui 's production of most products other than sophisticated audio gear offshore into Polly Peck 's own factories . `` Whatever capital it -LRB- Sansui -RRB- needs so it can compete and become a totally global entity capable of competing with the best in the world , that capital will be injected , '' Mr. Nadir said . And while Polly Peck is n't jettisoning the existent top-management structure of Sansui , it is bringing in a former Toshiba Corp. executive as executive vice president and chief operating officer . Such risk taking is an everyday matter for the brash Mr. Nadir , who is 25 % owner of Polly Peck as well as its chairman . He took Polly Peck , once a small fabric wholesaler , and used it at as a base to build a conglomerate that has been doubling its profits annually since 1980 . In September , it announced plans to acquire the tropical-fruit business of RJR Nabisco Inc. 's Del Monte foods unit for # 557 million -LRB- $ 878 million -RRB- . Last month , Polly Peck posted a 38 % jump in pretax profit for the first half to # 54.8 million from # 39.8 million on a 63 % rise in sales . Joann S. Lublin in London contributed to this article .