Panasonic to make Sanyo a subsidiary

http://search.japantimes.co.jp/mail/nn20081103a1.html

Monday, Nov. 3, 2008

OSAKA (Kyodo) Top officials of Panasonic Corp. and Sanyo Electric Co. have broadly agreed that Panasonic will make Sanyo a subsidiary next spring, sources said Sunday.

Panasonic, expected to launch a tender offer for Sanyo shares, may announce its plan to acquire the struggling electric appliance and electronics maker later this week, the sources said.



Panasonic is reportedly considering buying Sanyo by acquiring some of the preferred Sanyo shares now held by three major creditor institutions.

The creditors — Goldman Sachs Group Inc. of the U.S. and Sumitomo Mitsui Banking Corp. and Daiwa Securities SMBC Co. — currently hold 430 million preferred shares issued by Sanyo in 2006.

If converted into common shares, the stock would represent about 70 percent of Sanyo's outstanding issues in terms of voting rights.

Panasonic may also seek all outstanding Sanyo shares to make it a wholly owned subsidiary, industry observers said.

The top officials of the two companies also agreed that Sanyo's management independence would be respected, the sources said. The corporate and brand names would be maintained.


Sanyo's roughly 100,000 workers would not lose their jobs, the sources said.

Through the deal, Panasonic would secure a dominant global market share in the lithium-ion battery business and would obtain photovoltaic cell technology by acquiring Sanyo.

Combined group sales of Panasonic and Sanyo Electric totaled about ¥11.22 trillion in 2007, surpassing the ¥10.9 trillion logged by industry leader Hitachi Ltd.

Panasonic changed its corporate name from Matsushita Electric Industrial Co. in October.

The group has been looking for ways to promote merger and acquisition activities in a bid to attain consolidated sales of ¥10 trillion in the 2009 business year.

Sanyo founder Toshio Iue was a relative of Matsushita founder Konosuke Matsushita and worked for Matsushita before establishing Sanyo in 1947.

The recent global financial crisis has pushed down stock prices of Japanese companies, including Sanyo.

Panasonic apparently considers this as an opportunity to acquire Sanyo at a bargain price.