Let's Japan.org Debunking Eikaiwa and Ramblings in Japan

Like many readers here, zakzak wonders about the odd combination of restaurant companies and English conversation schools.

As you know by now, G.communication, which operates Nova and GEOS, which in turn was owned by Foodys, is now owned by Hanshin Shuhan after it acquired Foodys' 50.9% share of the company. Foodys sold its shares in G.communication in order raise money when its main bank, the Incubator Bank of Japan, was shut down by the Financial Services Agency on suspicion of obstructing an FSA audit. According a source that spoke with zakzak, Foodys sold its shares on the condition that Hanshin Shuhan assumed the loan that Foodys used to buy its stake in g.communication.

Zakzak then delves into the histories of the companies involved.

• G.communication started out as a juku and branched off into the restaurant business in 2000. It started growing and acquiring more restaurants around 2005 through a series of mergers and acquisitions.
• In October 2007, it took over Nova.
• However, G.communication's mergers and acquisitions left it short of cash and its president, Masaki Inayoshi, sold his shares in October 2009.
• The shares were sold to Foodys and Venture Link. Both companies are members of the Incubator bank of Japan's network for SMEs.
• Foody's, being the largest shareholder in g.communication with a 50.9% share, jumped on the M&A bandwagon with G.communication only to have its plans go off the rails when the Icubator Bank was shut down.
• Now that Hanshin Shuhan owns G.communication, it says it will continue to operate the eikaiwa business as usual.
• Hanshin Shuhan is a liquor distributor started by its 34-year old president, Higaki Shuusaku, in 2001.
• Hanshin Shuhan was new to the distribution business but quickly made an impact by leaving free refrigerators stuffed with drinks in offices, and then making the rounds collecting money for the drinks that had been consumed. The company raked in the money by taking a page out of the Toyama okigusuri method where medicine kits were distributed to homes and customers paid for what they used. From 2009, Hanshin Shuhan also got on the M&A bandwagon.
• In May 2009, it acquired Gyukaku through a take over of Asrapport Dining. In April of this year, it acquired liquor distributor Daishuhan from the Japan Asia Group. It's latest acquisition is G.communication.

Zakzak asks, "Where is the money for these M&As coming from?" One of Hanshin Shuhan's major shareholders are limited investment partnerships with investment enterprise Orix #10 being mentioned. An executive in a business research firms tells zakzak that Hanshin Shuhan is more an investment company than anything else. If true, izakayas and eikaiwa make for strange bedfellows in the world of mergers and acquisitions.

Comment: When I was a kid I was really into trading hockey cards and playing games like "knock down," farthies" and "scramble." I get the sense that the same thing is being done with GEOS and Nova, except that they aren't particularly valuable--kind of like picking up some 4th-liner pylon in a game of "scramble." They are minor players in larger deals and will eventually find themselves discarded and clothes-pegged in the spokes of some unlucky investor's bicycle.

In this ZAKZAK article, Sahashi gives an interview to the Shuukan Diamond and puts his detractors on notice that he is planning on striking back.

The former Nova president comes out of hiding to declare war

Defiant interview in business magazine

The final installment of ZAKZAK'S three-part series takes a at how the staff held up as Nova crumbled around them. Here's a translation of the article.

In a three part series, ZAKZAK takes a look at what lead to Nova's demise. Here's a translation of part 1.

The Bunny is Crying! Nova's collapse and the staff Part 1

Mornings started with "Have we been paid, yet?

ZAKZAK takes a look at why Sahashi changed his name. Here's a translation of the article.

ZAKAZAK explores Sahashi and the last days of his harem.As a side note, in this translation I've used the Japanese way of expressing names--using the last name first--since the article makes reference to a few historical figures.

It looks as though in trying to scrape together cash to pay everyone and keep Nova afloat somehow, Sahashi has made deals with some shady people. ZAKZAK ran an story yesterday about the president of Roots and the equity warrants Nova issued. Here's a translation of the story.