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Interview of Maruha/Nichiro CEOs talking about the merger
October 1, 2007
Suisan Times: A new era is about to start.
Tatsuhiko Tanaka (Nichiro CEO):
Nichiro delisted from the Tokyo Stock Exchange on the
25th of September and I can`t find stock its prices in the
paper anymore. That`s a weird feeling but I am extremely excited
because my expectation of the new group exceeds trivial things.
After announcement of the merger last year in December, we
have been intensifying study work regarding the merger and
have sorted out gap between ideal and reality. We will establish
Nichiro Maruha Holdings on the 1st of October and under the
holding firm, we plan to establish four companies each in
charge of business related to fishery, food, livestock and
distribution next year in April.
This is such a big merger. Therefore there are things we might
have to revise while we are actually running but hopefully
we can get off to a good start.
The main purpose of the merger is not to make our business
big. Rather, the integration is focused on building a strong
company. As a company who deals with food, our first mission
is to supply high quality foodstuffs. With the tight seafood
supply worldwide, we will be put to the in our ability to
effectively secure and provide high-quality raw materials
to our clients and customers. We are in a difficult time in
that respect. In a way, we have to have a lofty ideal to attain
Fortunately, Maruha has 127 year-old history, where Nichiro
just celebrated 100th anniversary and we have grown with cultivated
wisdoms and knowledge with dignity. We have firm determination
to make a strong business entity.
Yuji Igarashi (Maruha CEO):
We have so far prospered our businesses through growth strategy,
expanding the businesses and improving our finances. But our
business style faces limitation if we only look at domestic
market. We were aware of the same issue, which led the merger.
I hope one plus one becomes three but it is not that easy.
It`s been six years since I became CEO of Maruha. We have
come to a point where the company is not able to provide our
employees with materials to lift motivations. In fact, in
the past few years we never managed to hit previous year`s
performances. We need positive atmospherics to keep our employees`
spirits alive and well. In that respect, I believe this (merger)
will be a trigger to develop new situation; namely a new operation
with new weapons.
To map out a blueprint for future growth, business activities
overseas play a big role and the business consolidation will
widen our possibilities because overseas operations take a
certain level of dimension.
Because Maruha and Nichiro have strength in different fields,
it will broaden product portfolio of both seafood and other
Since the decision of the merger, employees at the two companies
are highly motivated. The atmosphere is just like "Now
we can get to a higher level."
ST: What will make you think that the merger is successful?
YI: We will aim for an operating profit
of \30 million on sales of \1 trillion. The job ahead of us
is to amalgamate the two companies into one. We have to make
an effort on this. The difference between other mergers and
ours is Maruha and Nichiro are very similar in the way companies
grew. Both have long histories, traditions and experienced
the same phases. We have been getting along well from the
start. Even at branch level, there`s a general feeling that
we should work hand in hand, rather than have a rift.
TT: Nichiro has set higher goals on purpose and
spurred employees to hit them in the past. This is just an
aside, but this style fell into disfavor with analysts. Operating
profit of \30 million on sales of \1 trillion is an enormous
figure. Integration costs are huge. The scale of business
means nothing if there`s a lack of substance. Therefore, profitability
is the top priority.
ST: It is expected sales structure of Maruha and Nichiro
will be strengthened under the merger
YI: Yes, indeed. We can pitch Nichiro`s
products where Maruha has strong relationships and that`s
vice versa. For example, Nichiro has strength in frozen items
for retail and we can promote Maruha`s products, such as cans
and fish sausages, at the same time. Some wholesalers only
do business with Maruha, while Nichiro has relations with
different vendors. We might see different relationships with
wholesalers, as well.
TT: The seafood business never dies. Rather,
this it is getting more attention worldwide. It is becoming
more apparent that global seafood demand is on the rise. Yet
business model has not been discovered in Japan. Japan especially
has too many players at the bottom and weak at sourcing. Even
if Nichiro has made great efforts to line up high-quality
raw seafood materials, we are only able to secure about half
of what we sell. The other half is from someone else, and
this makes profitability low. When fishing was in full flower
we didn`t care much about processing and distribution. If
catch was good and that`s pretty much it. If prices of fish
were low, we simply threw out another net. These days were
over and we have to cope quickly with the change of times.
The fact is that much change has been done at sourcing. Japan
is way behind the times.
There have been many cases of merger at the end of distribution
(retailers) and buying power is becoming even stronger. We
have to realize the fact that more customers are looking to
have a wider variety of fish, but sales floors do not reflect
YI: It is unlikely that we
will have a bigger voice over national retailers, such as
Aeon, but we will be able to negotiate better. We are in a
situation where we have to absorb the high cost of raw materials.
We hope this environment will change in the influence of our
Nichiro is innovative in developing frozen foods. Its signature
fried rice has great feedback and its subsidiary, Aqlifoods
is great at making frozen gratin. On the other hand, Maruha`s
frozen foods are mainly seafood and targeted for business
use. We have such a wide lineup of products and we need to
fully utilize the portfolio for future business operations.
ST: One big point of the merger is global strategy.
YI: Absolutely. The two companiesﾕ domestic
market accounts for 90% and market outside of the country
only represents 10%. We believe the seafood market will flourish
overseas and will put a focus on the U.S., the E.U. and Chinese
Market. Maruha has been viewed as world`s fish shop. Now with
the merger we will be world`s biggest in deed in the seafood
Our initial target is the U.S. In Asian countries we plan
to expand and enhance processing factories for Japan imports.
We will get a handle on a big scale future M&As in concrete
forms. We not only think a great deal of securing raw materials,
but also processing and distribution.
We cannot make a forward move if we stick to the same business
style. We are very eager to open up potential possibilities
and pave a new path.
ST: Will you ramp up efforts for food safety?
TT: Large food manufacturers spend much
time and money for food safety. For a business establishment
who deals with food, it is the most important aspect. We will
strengthen it even more so that customers can enjoy dining
Nissui acquired Cite Marine
October 1, 2007
Nippon Suisan Kaisha (Nissui) announced October 1st it spent
\2.6 billion or 16.8 million Euro to acquire a 59% stake in
a French frozen and chilled food producer, Cite Marine. Gallou
family owns 49% of its shares.
"Cite Marine has strong product development ability.
We have judged cite Marine can be a hub of our fishery and
processed food business in Europe. We believe we can maximize
synergy with Cite Marine and have come to a decision to acquire
its shares" explained the company.
The share acquisition is part of Nissui`s medium-term business
plan from the 2006 business year that calls for beefing up
the company`s European operations following the strengthening
of its North America.
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