Panasonic Corp. said on Nov. 7 it wants to take over its struggling rival Sanyo Electric Co. to create a new industry heavyweight better placed to ride out the current industry slump. The deal would result in Japan's biggest electronics maker and give Panasonic a bigger share of the fast-growing market for rechargeable and solar batteries.
Panasonic said it was interested in Sanyo's rechargeable and solar battery technology, and in return would share its cost-cutting know-how with its rival.
Credit Suisse analysts estimated a takeover could be worth up to $8.8 billion.
If finalized, a deal would mark the first major shake-up of Japan's consumer electronics industry in response to the current downturn triggered by the global financial crisis and a stronger yen. "The partnership was expedited considering the business environment," said Sanyo president Seiichiro Sano.
Sanyo has slashed thousands of jobs and sold non-core operations as part of a massive overhaul in recent years, while increasing its focus on rechargeable batteries and environment-friendly technology.
The company's fate lies in the hands of a clutch of financial heavyweights which are eager to see the firm revive its ailing fortunes. Sanyo, which started out making bicycle lamps after World War II, issued several billion dollars worth of shares to Goldman Sachs, Daiwa Securities SMBC Co. and Sumitomo Mitsui Banking Corp. in 2006 to shore up its capital base. Their stakes in Sanyo, if converted into common shares, would represent some 70% of the electronics maker's voting rights.
Analysts said Panasonic would probably be able to negotiate a relatively good price given the current market slump. "The current environment will allow Panasonic to buy Sanyo at a relatively cheap price with few competitive bids," said Seiichi Suzuki, a market analyst at Tokai Tokyo Securities. "No one else other than Panasonic and some investment funds raised their hands to buy Sanyo, which means it is not a very attractive company," he said.
Copyright Agence France-Presse, 2008