Following Fujitsu's acquisition trail
With a shortlist of 20 targets and a $5.8bn war chest, Fujitsu is on an M&A mission – here’s why the company is looking to ‘rebalance’, boost its services and pursue a global strategy
Six acquisitions in three years proved part of a successful growth strategy for LDC-backed communications provider Babble. In November 2020, a controlling stake was sold to Graphite Capital, valuing the communications business at £90m. Alice Murray finds out about a deal during lockdown, and where the high-tech company is going next
Regular and often
Japanese giant Fujitsu is scouring the globe for acquisitions, with a $5.8bn war chest and a shortlist of 20 targets. One of the world’s leading IT services providers, Fujitsu’s drive, coupled with a non-core disposal programme, aims to pivot the company away from hardware sales and increase its market share in tech and consulting services.
Having once called the group’s focus on hardware ‘unbalanced’, president and CEO Takahito Tokita (above) now says: “Instead of simply bolstering our hardware, we are considering various M&A options that will strengthen our software and services.”
The details of the targets have not been published for obvious reasons, but with Chinese-backed companies facing difficulties operating AI, data analytics and 5G phone services in western markets, Tokita may look to strengthen these areas first.
Nicholas Fraser, brought in from McKinsey to lead on Fujitsu’s M&A, says inorganic growth is most effective when “done programmatically. This means doing a number of deals each year and not just one or two every few years.”
Double act
Joining Fujitsu in March 2020 to head up M&A strategy and execution, Nicholas Fraser (right) is, in his own words, “building up Fujitsu’s M&A muscle” while “competition is intensifying in the pursuit of quality assets”. The Australian arrived at Fujitsu after three years as global lead for acquisitions, partnerships and alliances at McKinsey and six years as an MD for M&A in Asia Pacific for Accenture.
Takahito Tokita became president of Fujitsu in May 2019, launching a push for hires from rivals, including Microsoft and SAP. While still the leading IT provider in Japan, Fujitsu is pursuing a global strategy, hoping to turn around a slump that has seen its market value drop 40% since the turn of the century.
Tokita is a Fujitsu lifer, having joined the company in the 1980s. Prior to becoming president, he had been based in London as head of Fujitsu’s Global Delivery Group, which he sees as a model of company units working across borders.
On taking charge, he said: “We need to, as quickly as possible, convert to a service-oriented business outside of Japan. We aim to focus more and shift to services, and from the profit gained we need to inject that into new services.”
Non-core sell-off
The other side of Fujitsu’s M&A strategy is disposal of non-core assets, which has already resulted in the sales of subsidiaries in the semiconductor sector, and the firm’s mobile phone business (to Polaris Capital) and laptop business (to Lenovo), as the group’s focus switches to IT services.
The company also plans to halve its office space, and permanently shift many of its 80,000 Japanese staff to homeworking. US buy-out giants such as KKR, Carlyle and Blackstone are expecting Fujitsu’s disposal of non-core businesses to create a supply of under-used but potentially profitable assets for them.
Fujitsu history
1923 Fuji Electric sets out to restore Tokyo’s public infrastructure after the Great Kanto Earthquake
1935 Fuji Tsushinki – later Fujitsu – founded as Fuji Electric subsidiary
1945 Fujitsu approved as Japan’s official telephone manufacturer
1954-61 Unveils Japan’s first relay-type and transistor-based business computers
1966 Opens Nagano plant for mass production of computers
1976-81 Lists on Frankfurt and London stock exchanges; now Japan’s largest computer company
1981-84 Begins manufacturing PCs and car phones
1990 Takes 80% stake in International Computers Limited
1999 Announces ‘Everything on the Internet’ strategy
2003 Enters into partnerships with Intel, Sun, Cisco and Microsoft
2013-19 Sets out ‘Technology and Service’ vision; Takahito Tokita appointed President
2020 Unveils $5.8bn war chest