Cram school operator, Eikoh Inc., has bought Shane English School.
Cram school operator Eikoh Inc. said Friday it has acquired Shane English School to strengthen its English-language education for elementary school children ahead of the planned compulsory teaching of the language for fifth- and sixth-graders.
Eikoh, based in the Kanto region, didn't disclose how much it paid for the acquisition of shares in the four operating companies that run the English school chain, which mainly operates in the Tokyo metropolitan area.
According to the announcement of the purchase [PDF] on Eikoh's website, Eikoh will acquire all shares in Shane Corporation Japan, Shane Corporation North Kanto, Shane Corporation East Kanto, and Shane Corporation South Kanto. While no price has been made public, a brief blurb in the Nikkei keizai shimbun says the deal was around 1 billion yen (about $12 million USD).
Back to the Japan Times article:
Representatives of both Eikoh and Shane English School said the acquisition won't involve personnel cuts or other drastic changes in operations.
A source I know says that Eikoh and Shane has been in negotiations for some time. Apparently the deal is only for Shane's schools in Japan and not those in China and Taiwan, which are much more profitable. I suppose the deal is a safe one for Eikoh since Shane sells more monthly lessons as opposed to year-long packages, so they aren't any large hidden liabilities. Eikoh bought Shane as a strategic purchase in anticipation of English being introduced in elementary schools next year and English lessons being taught entirely in English in high schools in 2013.
I wonder about the promise of no personnel cuts or drastic changes. The Japan Times notes that 60% of Eikoh's and Shane's schools are in the same location. I take this mean that many or most of the schools are in the same building, not just near each other in the same neighbourhood. In their announcement, Eikoh sees this as having a synergistic effect. It's publishing company, Educational Network, get a shot in the arm from Shane's business. Eikoh gets to conveniently sell English lessons at Shane to its cram school students. Moreover, with 40% of Shane's students being junior high school students or younger, they are perfect candidates for cram schools.
The promise of no drastic changes makes the last paragraph of the article funny:
Takehiko Kikuchi, a PR representative for Shane English School, said company employees and teachers received the news calmly.
Nobody freaked out. No worries, everything is OK. Mergers aren't necessarily bad things, but in eikaiwa, recent history shows that they are almost always bad news, as seen with G.communication's takeover of Nova and GEOS. Whether or not Eikoh's purchase pays off remains to be seen.