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Success Stories
Asahi Kasei Homes Corp.
Enter into the housing market in Australia through M&A deal
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1. Overview
Asahi Kasei Homes is one of the leading home builders by number of housing starts in Tokyo and other urban centers in Japan. Under the medium-term management initiative “Cs for Tomorrow 2018” of Asahi Kasei Corp., parent company of Asahi Kasei Homes, the Asahi Kasei Group is targeting net sales of ¥1 trillion and operating income of ¥100 billion in the Homes sector in fiscal 2025. While continuing to expand its existing business cantered on Hebel Haus™ order-built unit homes, Asahi Kasei Homes is also working to create new business in new fields with new business models, and overseas business is one area identified for new business creation.
Asahi Kasei Homes explored new business opportunities to leverage its strengths in overseas, including Australia. As a result of careful study, Asahi Kasei Homes decided to enter the unit-homes business in Australia cantered on order-built homes through a capital alliance with McDonald Jones Homes. Rather than selling Hebel Haus™ products in Australia, the alliance will leverage the know-how accumulated by Asahi Kasei Homes in Japan to gain synergies with McDonald Jones Homes to expand the unit-homes business in Australia.
J-ABC has been working with Asahi Kasei Homes for more than 2 years to help them successfully enter the Australian housing market from the market research and finding the right partner in Australia through a number of meetings at the beginning and on-going advisory support for M&A deal and PMI (Post Merger Integration)
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2. Details
Client: Asahi Kasei Homes
Industry: Housing
Website: http://www.asahi-kasei.co.jp/asahi/en/aboutasahi/homes/
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3. What they achieved and why they chose Australia and McDonald Jones Homes
Asahi Kasei Homes Corp. has acquired 40% of the shares of McDonald Jones Homes Pty Ltd., an Australian company which constructs and sells unit homes, based on an agreement between the two companies dated June 26, 2017. Acquisition of the shares was completed on July 31, 2017.
Reason for capital alliance with McDonald Jones Homes
1) Strength of geographical focus for unit homes in Australia
Demand for unit homes in Australia is concentrated on the east coast of the country, with some 70% accounted for in the three states of New South Wales, Victoria, and Queensland, where the three most populous cities, Sydney, Melbourne, and Brisbane, are located. Based in Newcastle, New South Wales, in the vicinity of Sydney, McDonald Jones Homes is ranked No. 6 in 2016 for unit-home starts in Australia and ranked No. 1 in New South Wales,* the market that holds the greatest promise in Australia fuelled by a continuously growing population.
*According to Australia’s Housing Industry Association(HIA).
2) Potential to leverage Asahi Kasei Homes’ know-how in design standardization and commercialization
Australian unit homes are generally wood-framed one-storey homes or brick homes. The mainstay products of McDonald Jones Homes are homes with a steel-frame structure, including those with autoclaved aerated concrete (AAC) exterior walls. Asahi Kasei Homes believes this presents an outstanding opportunity to leverage the know-how it has accumulated in its own order-built Hebel Haus™ unit-homes operation. Especially against a backdrop of cost pressures due to a shortage of construction workers, it is believed to be possible to reduce construction costs while raising construction capacity by combining the marketing and technical strengths of McDonald Jones Homes, Australia’s leader in the field of steel-frame unit-homes, with the know-how of Asahi Kasei Homes in standardization and systemization.
3) Long-life residence strategy and compatible company visions
Based on a belief in “people being at the centre of our business,” McDonald Jones Homes operates under the principle of being the most trusted home builder with the highest standards, which is aligned with the Asahi Kasei Homes vision of realizing long-life homes that provide ongoing customer satisfaction. Through its capital alliance with McDonald Jones Homes, Asahi Kasei Homes looks forward to achieving sustainable growth and expansion of its operations in the Homes sector.
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4. How they did it
J-ABC introduced and facilitated discussions* with a number of key players in Australian housing industry to understand the housing market and businesses in Australia based on the selection criteria from Asahi Kasei Homes including:
• Housing Industry Association (HIA) in NSW, VIC and QLD
• Master Builders Australia in NSW, VIC and QLD
• Urban Development Institute of Australia in NSW, VIC and QLD
• The state governments and local city councils in NSW, VIC and QLD
• A number of property developers in NSW, VIC and QLD
• A number of housing companies in NSW, VIC and QLD
*Total more than 40 individual meetings were organised and attended by J-ABC
J-ABC conducted some industry researches to create a report written about some detailed analysis of McDonald Jones Homes.
J-ABC also worked with some industry experts to analyse Australian builders and housing industry outlook to create some reports.
During the M&A process, J-ABC provided strategic advice to Asahi Kasei Homes and also attended the meetings with McDonald Jones Homes for Asahi Kasei Homes to facilitate and support the discussions.
After the M&A deal signed, J-ABC is currently supporting Asahi Kasei Homes for their PMI (Post Merger Integration) activities to collaborate with McDonald Jones Homes as of Nov 2017.
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Testimonials
Mr. Takafumi Terashima, Hokkaido Electric Power Co.,Inc.
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Please share with us the key issues/difficulties you experienced when doing business in Australia prior to engaging Japan Australia Business Creators (J-ABC)? What did you task J-ABC to do?
Because Australia and New Zealand are developed countries of electricity liberalization, our company decided to conduct some researches about the electric power retail businesses in Australia and New Zealand. We were originally struggling to organise this research by ourselves because we didn’t have any connections with retailers to conduct the research in Australia and New Zealand and we needed to confirm all the meetings within short period of time.
Therefore, we were looking for the local company in Australia which was not only very familiar with the specialised area to be researched for translation and interpretation but also could organise the meetings with right companies and departments for our research based on what we wanted to know/ understand. -
Why did you choose J-ABC?
It is because we found out that J-ABC could deal with everything we were in trouble through some discussions before the contract. In particular, we immediately decided to sign a contract with J-ABC because managing director of J-ABC could accompany all the meetings in Australia and New Zealand. The fact that the offer price from J-ABC was very reasonable is also a major factor.
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In regards to the service J-ABC provided, what would you say has been most helpful?
(1) J-ABC used a wide range of their network to organise meetings with the companies which seem difficult for us to organise within a short period of time.
(2) Regarding the items/ matters of our research, despite only telephone and e-mail exchanges in advance, J-ABC could understand the details and had been able to support our research.
(3) Besides J-ABC could organise all the meetings with the companies which we wanted to meet, J-ABC was also able to provide support to select companies that match our research purpose and organised the meeting with them as well.
(4) Following our visits in Australia and New Zealand, J-ABC did follow-up to each company who we met and support in creating our internal report.
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Did you find or learn something through J-ABC’s service which you think is useful for your future project?
In regards to the research in overseas including specialised research items, we could understand that it is much harder than what we thought to organise the meetings with right departments and people in overseas without having any relationships with these companies. Even if we could initially contact some companies in Australia and New Zealand, they closed their window to talk with us.
Therefore, we could understand that it is most effective and efficient way to conduct the specialised research in overseas is asking local consulting company like J-ABC to support us. -
What is the main difference between J-ABC’s consulting service and others which you have used before?
We asked another company to do the same things in Australia and New Zealand, they could not deal with the companies in Australia and New Zealand properly and they could not organise the meetings with them.
J-ABC has a wide range of relationships, knowledge and experience in Australia and New Zealand. I think that this is the biggest difference between what J-ABC can do and what other cannot do. -
What would you say to someone who may be undecided about participating in J-ABC service and consulting?
J-ABC can deal with everything from preliminary survey to follow-up after the meetings based on what we are looking for.
J-ABC explain the details of their consulting services during the first consultation and find out the solution to overcome the issue with us, if you are looking for any business support or consulting services to do your business in Australia, we recommend you contact J-ABC first.
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Mr. Sato, Mitsui Engineering & Shipbuilding Co., Ltd.
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Mr. Tsukada, Mitsui Engineering & Shipbuilding Co., Ltd.
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Mr. Kawahara, The government of Japan
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General Manager of one of the top major Japanese energy companies
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