The list of suitors for Nissan grows smaller with each day. Foxconn has now dropped out.
A few years ago, the Japanese company Olympus decided to drop its camera and lens division. This came after 84 years of relative success and prestige peaking in the 1970s. After recording losses for 3 years straight, Olympus decided that the digital camera business was too competitive but its troubles started decades ago and culminated in a financial scandal in 2011. This scandal nearly derailed the company but they reshuffled and soldiered on until the losses started to pile on. Ultimately, Olympus sold off its digital camera and lens division and focus on more profitable imaging systems for laboratories and medical facilities.
We can’t but think of the similar situation that might be unfolding at Nissan. Nissan, like Olympus is an old Japanese company that peaked in the 1970s. Like Olympus, Nissan has been publicly humiliated by scandals – the tobashi scheme accounting frauds for Olympus and the Carlos Ghosn debacle in the case of Nissan. So let’s see where Nissan might be heading based on what happened to Olympus.
When Olympus was faced with the reality of the changing digital camera market, what did they do? They sold off their Imaging divisions (OM and Zuiko) with private equity firm Japan Industrial Partners (JIP) stepping in to complete the acquisition. Olympus Corporation today continues to survive and thrive with their profitable divisions intact. They simply cut off the parts of the business that were dragging them down as a whole.
Apparently JIP was one of the few private equity firms that were allowed to help Olympus out. JIP has also bought ailing divisions Vaio from Sony, Nippon Avionics from NEC and Toshiba outright. It is in Japan’s interest to keep Japanese technology and assets out of foreign ownership, though it isn’t unheard of. Sharp, for instance, is now owned by Taiwanese tech-giant Foxconn. Interestingly, Nissan has recently approached Foxconn but that company is looking for a partnership rather than to buy Nissan outright.
We don’t think JIP will come to Nissan’s rescue. Mostly because JIP operates in the tech sector and Nissan is firmly an automotive company. It’s also likely that Nissan’s profitable and unprofitable operations are too entangled with one another to make a simple carve out possible. That being said, the list of potential suitors grows thin. Perhaps there is a JIP-equivalent in the automotive sector that the Japanese government will support to create conditions that will Nissan survive. After all, with Olympus, their imaging system company is slowly managing to find its footing after a few years of being spun off.
