Thomas Hoover - The samurai strategy

Touche, I thought. Round one to Noda, on points. "I assume you've had a look at the package of materials I messengered up to your hotel yesterday?"

A broker friend had put together some listings for office buildings around midtown-it turned out the market was softening a touch due to the latest construction binge-and I'd hoped that maybe something would catch Noda's eye. Matter of fact, there were a couple of real bargains over near Sixth.

"My people have examined it in detail. We would like to move forward on the twenty-story building on Third Avenue."

For a second I thought he was joking. Sure we'd tossed in the write-up, because it fit his profile, but it was a crazy all- cash deal, and they wanted ninety million, firm.

"Did you read the terms on that one? It's all-"

"There is a vacant floor, is there not? Available immediately?"

"Well, yes, but-"

"There may be a few items to clarify-we would like your legal opinion concerning the leases of the existing tenants-but nothing major. If the seller is prepared, I think we could even go to contract early next week, while I'm here. I would like very much to close as soon as possible. If some of my staff can meet with the seller's attorneys over the weekend, perhaps we can start work."

Over the weekend? No counter bid, no haggling? Now, you didn't have to be a brain surgeon to realize this was a fast-track deal; Matsuo Noda was a man in a hurry. "Looks like you just may have yourself a piece of property. I'll try and get hold of them in the morning, if I can, and start the ball rolling."

"Excellent." He hesitated a moment, as though framing his words, then continued, "But in fact, Mr. Walton, we'd actually wanted to meet you tonight for an entirely different purpose. I'd hoped we might be working together on, well, some additional matters."

"Something else?"

"As you might surmise, we are not enlarging our presence here to no purpose. Tonight I wanted to tell you something about the objectives of Nippon, Inc. And then let you decide if what we propose merits your participation. Your financial expertise could make you a great asset to us."

Hang on, I thought. This thing is starting to go a little fast.

"What do you have in mind?"

"First let me say you are a man I have long admired. Your style is not unlike my own. We both understand the importance of moving cautiously, of keeping our adversaries off guard. Most of all, there is a rigorous discipline about your work. That is the style of bushido, the way of the warrior." He smiled, and his tone lightened. "I think we could cooperate very effectively."

Already I was wondering whether I really wanted to "cooperate" any further with Matsuo Noda. Something about the man, and Miss Mori, made me very nervous. Besides, I was trying to finish off work now, not begin more. But he'd found out the one line that would keep me listening. He'd somehow discovered I was a deep admirer of the old-time military strategists of the East-such as Sun Tzu and Miyamoto Musashi.

Like a hostile takeover bid, the ancient Japanese way of combat was ritualized, as mounted warriors rode out, announced their lineage (to the SEC?), then matched up with men of equal renown. The samurai prized flexibility over brute strength; they had steel swords that handled like scalpels and body armor that was a woven mesh of lacquered-iron scales laced together in rows to create a "fabric" of metal. Those weapons and armor made for agile movement, easy feints, fast changes in strategy-all trademarks of mine on the corporate takeover battlefield.

As a result, I fancied myself some kind of samurai too…

The question was, how did Noda know this?

For some reason just then I glanced over toward Akira Mori. She appeared to be studying a scroll with the detachment of a Zen monk in zazen meditation, but she wasn't missing a syllable.

"Care to run through whatever it is you have in mind?" I indicated one of the ottomans along the side of the room, now clearing as bidders rose to go inside. I watched as the dark- suited Japanese businessmen filed past, none with Noda's sense of style, and noticed that several seemed acquainted with him, pausing to offer obsequious bows.

"With pleasure." He settled himself. Mori, now looking over some screens, still didn't elect to join us. "First, may I presume you already know something of Nippon, Inc.?"

"No more than what I gleaned from that package you forwarded. Almost nothing, really."

He laughed, a flash of even teeth. "Perhaps I should be pleased. These days too much visibility in the U.S. can sometimes stir up 'friction'."

"Your prospectus indicated you help banks manage capital, so I assume you're looking to enter the financial picture here."

That was the funny part, recall? There was no indication of any U.S. action in his prospectus. Yet I knew that, overall, Japan's U.S. investment, private and public, was in the tens and hundreds of billions. Pension funds and industries were building factories, financing corporations, snapping up Treasury paper. Japan had become a major source of fresh money for the U.S. and for the world. But Nippon, Inc. wasn't one of the players.

"Yes, we intend to be concerned, initially, with the position of Japanese capital in the U.S. We are particularly interested in the matter of Treasury debentures."

That was what anybody would have figured. Just that week the Journal had noted that Japanese investors were expected to cover half of our Treasury overdrafts for the year. They were advancing us the bucks to keep up that spending spree known as the national deficit. They sold us Toyotas; we sold them federal IOUs, using the proceeds to buy more Toyotas. In effect they were financing the good life, supplying us the "revolving credit" to buy their cars and DVDs and semiconductors.

"Treasuries always make a lot of sense." I picked up the thread. "Full faith and credit of the U.S. government, all the rest."

"Quite so, Mr. Walton, but since all things are theoretically possible, over the past few months I've undertaken a small program through subsidiaries of Nippon, Inc. to begin cushioning Japan's exposure in your Treasury market somewhat." He paused. "Now that my effort may be expanding significantly, I was wondering if perhaps you might consent to serve as our American agent in that endeavor."

For a second I didn't grasp what he was driving at, probably because my involvement seemed totally unnecessary. Surely he realized Treasuries were bought and sold here every day on the open market through dealer banks? No big deal. Why bother hiring a middleman?

"I can make this quick. Why don't you just contact some of the authorized Japanese brokers here in New York? You must have used them before. Nomura Securities is well respected. There's also Nikko Securities. And Daiwa Securities America. They're all primary dealers in Treasury paper now. Buy or sell whatever you like."

Noda nodded. "Of course. But we both know the financial markets can be very delicate. Impressions count for much, which is why I have chosen to keep a low profile. Consequently, I would prefer to continue to operate for a time outside normal channels. And in that regard, I now believe it would be desirable to have an experienced American financial specialist assist us. You, in particular, would be ideal."

I studied him. "Let me make sure I understand this. You're asking me to step in and begin fronting for you here in the Treasury market?"

"That is correct, Mr. Walton." He rose and strolled over to the row of tachi swords, where Miss Mori was still standing. They were lying on a spread of dark velvet, and she was scrutinizing them with a connoisseur's eye.

Now, I'd like to think I was a quick study of a situation, but this one was definitely out of whack somehow. If all Noda wanted was to roll over a little government paper, why the hush-hush? More to the point, why a whole building in midtown? He could easily do it from Tokyo. The scenario didn't compute.