You have to love the headline Cisco Systems Inc. put on the press release announcing the resignation of the executive favored by many to succeed long-time CEO John Chambers: "Cisco evolves senior technology leadership team."
But behind the spin surrounding the departure of Charles Giancarlo, Cisco's 50-year-old chief development officer and a founding father of the company's vaunted M&A strategy, the news could mark a significant change in the way Cisco decides which companies to buy.
As news stories go, a visit to Nasdaq Wednesday by some executives from Fushi International Inc. couldn’t hope to compete with the $5 billion that China Investment Corp. ltd. pumped into capital-impaired Morgan Stanley. Yet a small U.S. acquisition by Nasdaq-listed Fushi says more about the kinds of deals ordinary Chinese companies will be looking for as they pick up the pace in their U.S. acquisition activity.
Founded in 2001 and posting 100%-plus annual growth rates, Dalian, China-based Fushi makes bimetallic wires used in telecom and other applications. As Chris Wang, Fushi’s CFO, explained in an interview Wednesday, Fushi needed more manufacturing capacity plus access to global markets and a brand that’s known outside China.
Nippon Steel Corp., Sumitomo Metal Industries Ltd. and Kobe Steel Ltd. jointly announced a ¥260 billion ($2.3 billion) cross-purchase of shares and the building of strategic cooperative measures, such as the mutual use of core production facilities. When it comes to the largest steelmakers in the world, Nippon is second only to Luxembourg's ArcelorMittal. Bloomberg reported that Nippon's VP, Kiichiro Masuda, said, "[These] additional cross-holdings will eventually have the impact of increasing stability of shareholdings and act as a protection against takeovers.'' Last week, ArcellorMittal increased a minority holding in Hong Kong-based China Oriental Group Co. Ltd. to just over 73% for about $770 million.
More on the numbers:
- Nippon and Sumitomo Metals will each purchase the other's shares for around ¥100 billion
- Nippon and Kobe Steel will purchase the other's shares for about ¥15 billion
- Sumitomo Metals and Kobe Steel will also spend ¥15 billion on each other
The share purchase agreements are expected to be completed by March. — Baz Hiralal
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