Panasonic seeking to buy Sanyo

[ShriDurga]

http://afp.google.com/article/ALeqM5g4K61D...SJQAWwiMaptxQUg

Japan's Panasonic aims to buy rival Sanyo

1 day ago

TOKYO (AFP) — Panasonic Corp. said Friday it aimed 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.

Credit Suisse analysts estimated a takeover could be worth up to 8.8 billion dollars.

If finalised, 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 companies will be able to increase their competitiveness in areas such as batteries and energy-saving products," said Panasonic president Fumio Ohtsubo.

The boards of the two companies agreed to start talks with a view to Sanyo becoming a subsidiary of Panasonic.

"We would like to have a majority of its shares," Ohtsubo said.

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 percent 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.

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.

Sanyo reported its first annual net profit in four years in May after drastic streamlining.

But its fortunes have taken a turn for the worse since then and the Osaka-based company said this week its quarterly profits plunged by two-thirds in the fiscal second quarter due to a stronger yen and sluggish sales.

It has been a troubled few years for Sanyo. Toshimasa Iue, a member of the founding family, stepped down last year after he clashed with the big investors over restructuring.

The resignation came soon after the departure of its chairwoman Tomoko Nonaka, one of Japan's highest-profile female executives, following a scandal over alleged window-dressing at the electronics maker.