Should the Japanese let New York private equity firm Kohlberg Kravis and Roberts buy a controlling stake in Renesas for $1.3 billion?
The 20-something year-old super-sharpies at KKR are beside themselves with excitement. Here's a company with 46,000 employees and $10 billion in revenues. How many do we sack? How much profit do we want?
For the Japanese the dilemma is: Why should the Yanks take all the profit from a re-structuring? But have we the stomach to do the re-structuring ourselves?
The Japanese solution to failing companies has been government-assisted consolidation with disastrous results. The Japanese government, the Japanese companies and the shareholders in Japanese companies are getting pretty fed up with the Japanese solution.
Renesas management is more than usually leaden - even by Japanese standards. A Japanese solution would leave the same old lurkers in situ. The Yankee solution would not.
But a re-structured Renesas with $10 billion of, by then, highly profitable revenues would be IPO'd by KKR for how much? $5 billion? $10 billion? More?
And what would the Japanese people think of a Yankee outfit making that much profit from a Japanese company.
But if the Japanese re-structured KKR themselves, what would the Japanese people think of a Japanese company which sacked tens of thousands of Japanese employees?
And that's the Japanese dilemma.