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Thursday, Nov. 8, 2007

G.communication has grown quickly on M&As


Staff writer

Nagoya-based G.communication grp., the firm taking over part of the failed language school chain Nova Corp., has grown rapidly in the past few years via aggressive mergers and acquisitions.

Headed by 38-year-old President Masaki Inayoshi, the firm expanded its business by purchasing shares of restaurant chains, including sushi chain Heiroku in July 2005 and Yakinikuya Sakai Co. in May.

Financial results of G.communication, which has some 2,000 employees in its group, show sales and profits sharply increased from the business year that ended in May 2006, when it acquired shares of companies or took over businesses in 11 cases, all in the restaurant and food-related business.

In that business year, the company's pretax profit jumped to ¥1.9 billion from ¥658 million in business 2005, while sales nearly tripled to ¥20.2 billion from ¥6.9 billion.

In the business year that ended in May, G.communication posted ¥2.4 billion in pretax profit and sales rose twofold to ¥45.9 billion. The firm was involved in seven M&As.

The aggressive strategy has at times led to shady deals that have caught the attention of the government.

In October 2006, the Financial Services Agency ordered G.communication to pay a ¥390,000 fine for insider trading after purchasing shares of one of its subsidiaries that was planning a capital increase before the information became public.

Born in Gamagori, Aichi Prefecture, Inayoshi started working as a local city official. In 1994 he opened Ganbaru Gakuen, a private cram school, which later became G.communication, and quit the city office the next year to focus on his business.

On G.communication's Web site, Inayoshi comments on his business philosophy, saying he runs the group as its owner because he wants to please his employees, who have invested their lives in him, and their families.

To become profitable, Inayoshi said his company has to have the support of the public and franchise owners, as well as good relations with business partners and those involved with the firm.

According to Nova's court-appointed administrators, G.education, part of the group, will take more than 30 schools from Nova and open them as soon as possible. It plans to eventually expand the number of schools to 200. G.education Co., a 100 percent subsidiary of G.communication established in Nagoya in 2003, is in charge of the company's education sector. It currently has 42 English conversation schools and 225 instructors and other staff under its brand EC Eikaiwa (EC English Conversation).

Although G.communication started out as a private cram school in 1994, it was not until a few years ago that it developed an interest in the English-language business.

Last year, it acquired all of the shares of an English-language school chain in Hokkaido with some 50 schools, merging it into G.education.



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