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NEC and NEC Soft Take a 60% Stake in SGI Japan

NEC Corporation and NEC Soft acquired a combined 60% of SGI Japan in 2001, while SGI retained an exclusive distribution arrangement. SGI bought the remaining shares in 2011.
From TheFinanceBase Team1 min to read

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On November 9, 2001, NEC Corporation acquired 40% of Silicon Graphics’ Japanese subsidiary, SGI Japan, and NEC Soft acquired another 20%. SGI’s SEC filing put the combined purchase price at 11.5 billion Japanese yen. SGI Japan retained exclusive distribution rights for SGI equipment, services, and solutions in Japan.

How much of SGI Japan did NEC take over?

The two buyers acquired 60% in total, but the stake was divided: NEC Corporation bought 40% and its publicly held affiliate NEC Soft bought 20%. Silicon Graphics, Inc. later reported the November 9, 2001 transaction and aggregate price of 11.5 billion yen in its 2004 Form 10-K.

A contemporaneous EDN report dated October 26, 2001 described NEC as taking a 60% equity stake valued at about $63 million. That is EDN’s approximate dollar estimate; it is not the yen consideration stated in SGI’s later SEC filing.

What changed for SGI after the sale?

From November 10, 2001, SGI stopped consolidating SGI Japan’s results and instead recorded its proportionate share of the subsidiary’s earnings, according to its SEC filing. The ownership change did not end SGI’s route to market in Japan: SGI Japan continued under a “long-term exclusive distribution agreement to supply SGI equipment, services and solutions in Japan,” as the filing describes it.

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When did SGI regain full ownership?

On March 9, 2011, SGI announced that it had acquired all outstanding shares of SGI Japan from an investor consortium that included NEC, Sony, and Canon Marketing Japan. The company said it paid $17.9 million in cash. SGI characterized the purchase as a strategic entry into Japan’s technical-computing market and described SGI Japan as primarily a sales and service organization; these were the company’s stated rationale and characterization, respectively. The announcement was distributed by PR Newswire.

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