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Tokyo - Japan's Panasonic Corp said on Friday it had cleared the way to acquire struggling Sanyo Electric Co. for up to $9bn, forming an industry heavyweight amid the global downturn.
The deal is the first major realignment of Japan's electronics industry since the start of the economic crisis, which has led companies to suspend production as consumer demand dries up.
Panasonic will buy Sanyo shares from US investment firm Goldman Sachs and Japan's Daiwa Securities and Sumitomo Mitsui, giving a badly needed cash injection into the financial sector as it reels from the credit crunch.
Sanyo, which started off making bicycle lamps after World War II, has cut thousands of jobs as it attempts to return to profit. Recently it has tried to focus on environmental technologies including solar energy and rechargeable batteries.
Panasonic said it had reached a deal on a tender offer aiming to secure a 70.5% stake in Sanyo at ¥131 yen a share, valuing the deal at a maximum of ¥800bn.
In a joint statement, Panasonic and Sanyo said the companies had to take "drastic action" to spur revenue and growth in the midst of the financial crisis and intensifying global competition.
"Panasonic and Sanyo believe that together they will evolve into a corporate group which will be highly admired globally" including by "coexisting in harmony with the global environment," they said.
With the acquisition, the companies hope to team up to expand in the solar energy business "in which significant future growth is expected," they said.
Sanyo, which like Panasonic is based in the western Japanese metropolis of Osaka, will remain listed, the statement said.
Sanyo has had a troubled few years, issuing new shares bought by Goldman Sachs and other financial firms in a bid to raise money.
Toshimasa Iue, a member of the founding family, stepped down last year after he clashed with the big investors over how far to restructure the company.
Panasonic, which is already Japan's biggest seller of consumer electronics, has been seeking to raise its global profile against rivals - notably Sony Corp - that enjoy solid name recognition.
Kazumasa Kubota, an analyst at Okasan Securities, said that despite the high cost, "in the longer term the acquisition is absolutely an advantage for Panasonic."
"Sanyo reportedly holds hundreds of patents in the field of battery technology and has strengths in solar power," he said.
Kubota credited Panasonic with negotiating shrewdly, knowing that Goldman Sachs needed cash.
Just two weeks earlier, Goldman Sachs had rejected an offer from Panasonic that was reported to be ¥130 per share - only one yen difference from the ¥131 in the agreement.
But on Tuesday, Goldman Sachs reported a $2.12bn net loss in the fiscal fourth quarter to November, the first time it has gone into the red since going public in 1999.
- AFP
