presentation by Gerhard Fasol, at the Industry Association of Japanese telecom and networking equipment makers, Friday November 27, 2008, 15:00-16:30
Presentation was fully booked several weeks before the talk, attended by about 100 managers and executives of Japan’s telecom equipment makers, and included also the Vice-Minister/Secretary of State of Japan’s General Affairs Ministry, which is responsible for telecom regulation in Japan.
Nomura CEO, Kenichi Watanabe, today gave a presentation about the acquisition of the former Lehman Brothers operations in Europe & ME, Japan, Asia (ex-Japan) and in India.
Europe and ME:
Equities and investment banking operations (approx 250 people)
Fixed income staff (approx 150 people)
approx. 1100 people
approx. 1500 people
three subsidiaries, in total approx 2900 people
LB Services India, IT, Global servicing
LB Financial Services India, research services
LB Structured Finance Services, Capital Markets Support and Analytics
Nomura is strong in mutual funds (74.2% of business) Lehman is strong in hedge funds (56.8% of business)
Nomura is strong in retail
Q&A (there was an extensive Q&A session), selected questions were:
Question: Could the Lehman acquisition be seen as a “reverse takeover”, ie Lehman people taking over Nomura?
Answer: any kind of takeover, foreign staff taking over, new hires taking over, long term employees taking over is ok for Nomura, if it makes the customers, shareholders and employees happy.
Question: how does Nomura plan to cover the acquisition costs, how does Nomura plan to become profitable, and could there be cuts in headcount?
Answer: we will right-size in each business area according to the necessities in each business area, and in some business division we are hiring and increasing headcount.
Question: what about highly paid “talents” and high bonus payments? Could there be friction with existing Nomura employees?
Answer: Nomura already has several thousand employees with about 50 or more nationalities, and some are paid more than the CEO of Nomura, so we are already familiar with this situation. Currently Goldman-Sachs CEO and top executives have announced that they will not receive any bonus payments. We will hope that this will be understood in our company as well.
Question: Will the acquisition mean an end to lifetime employment and bring the introduction of performance based payment?
We must make sure that we satisfy our clients, we will focus to deliver the services our clients need.
Stuart Chambers, CEO of NSG Group, gave a press conference on October 16, 2008, here are some notes and thoughts.
On February 16th, 2006, Nippon Sheet Glass’ offer for the 80% of Pilkington plc it did not already own, for US$ 3.14 billion in total, was accepted by Pilkington’s share holders and the acquisition was completed in June 2006. At the 142nd Annual Shareholder Meeting on June 27th 2008, Stuart Chambers was appointed Representative Executive Director, President and CEO of NSG Group.
Here some essential points of Stuart Chambers’ presentation, entitled “Four critical factors for Japanese corporates making major international acquisitions”.
The four critical factors in the title are:
Integration (share holders and customers demanded integration, because the value of the combined NSG + Pilkington after the acquisition must become bigger than the sum of its parts -> must change HR management, and board)
Repaying debt -> senior management must understand the balance sheet
Identifying growth opportunities for the future (glass for solar energy)
From the outset the aim was not to create a Japanese company with overseas subsidiaries, but to create an international company, headquartered in Japan and listed on the Tokyo Stock Exchange. Therefore the greatest changes needed to be made in Japan.
NSG Group changed from an exclusively Japanese Board, to a new Board structure:
Board of Directors: 12 (7 Japanese + 5 non-Japanese) and
Executive Officers: 23 (11 Japanese + 12 non-Japanese)
These changes were necessary in order to retain non-Japanese management talent from leaving the acquired company after the merger.
The Board structure was changed from the traditional Kansayaku (Corporate Auditor) structure to a Board with Committees.
HR management changes from internal promotion according to time served in each job level to the international practice of combining internal and external hiring according to capability and demonstrated performance ignoring age as a factor.