It probably won’t do the managements of NEC Electronics and Samsung Electronics much harm to have the chill breath of private equity scrutiny blowing down their necks, after all they’re big boys, and can look after themselves.
But it might well come as a shock to the employees. Despite all the restructurings of the Japanese and Korean corporate sectors, there is still loyalty, and national pride in working for a prestigious locally-owned company.
What would employees feel to learn they might be owned by a US ‘corporate raider’, or faceless private equity fund? Deflated would be an understatement. Shock’n Awe would be more like it.
While a takeover at Samsung seems unlikely to happen, because a buyer would have to stump up a premium over the $110bn market cap, and the Koreans will fight the move tooth and nail, there is a chance that US investors could get management control of NEC Electronics if the parent company is willing to give up its majority representation on the board, or reduce its shareholding from 70 per cent to below 50.
But will it? Even if group management might not be averse to doing it, throwing a subsidiary to the wolves may seem a little too brutal for the Japanese business culture to stomach. At the moment, anyway.
But private equity seems to be exploring the limits of the possible at the moment. Japanese CEOs report getting a lot of phone calls from them, and a lot of requests for meetings. The sums being bandied about appear generous, to say the least.
The question for Japanese CEOs is: How will we look to our employees, and to the public at large, if we sell out to foreign financiers?
No one knows the answer to that one. Yet.
TOMORROW MORNING: TEN BEST SEMICONDUCTOR SALESMEN
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