Panasonic In Talks To Buy Sanyo
In an industry hit by slowing consumer demand, Panasonic Corp said it would acquire smaller rival Sanyo Electric Co, creating Japan’s top electronics maker and foreshadowing further consolidation.
One analyst estimated the $8.8 billion acquisition would fortify Panasonic’s competitiveness in rechargeable batteries and solar power equipment as demand grows for greener energy sources.
Panasonic has not said what it might pay for Sanyo, or what it plans to do with the latter’s loss-making businesses such as home appliances and microchips.
Hannah Cunliffe, fund manager at Germany’s Union Investment, said strategically the deal makes sense, but it doesn’t necessarily make sense for Panasonic to take on every single bit of Sanyo Electric.
Sources say Sanyo and Panasonic had even agreed in principle to a deal.
Panasonic would also acquire Sanyo’s leading position in rechargeable batteries, which are widely used in mobile phones, PCs, music players and increasingly to power cars. And with Sanyo being one of the world’s largest solar cell makers, Panasonic could enter the emerging solar market.
"Adverse business conditions are making it difficult for us to achieve the kind of growth we have been striving for," said Panasonic President Fumio Ohtsubo. "We need a new growth engine within our group."
Panasonic would have to buy out Sanyo’s top three shareholders, Daiwa Securities SMBC, Sumitomo Mitsui Banking Co and Goldman Sachs, which bailed out the company in 2006.
Analysts said the deal, which sparked a rally in Panasonic and Sanyo shares earlier in the week, could trigger another round of consolidation in the overcrowded sector.
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