Panasonic in talks to acquire its rival, Sanyo

03 November 2008

Japanese electronics group Panasonic is reportedly considering acquiring its smaller rival Sanyo, a major manufacturer of solar cells and rechargeable batteries with the largest global market share for making lithium-ion batteries currently used in mobile handsets and laptops.

Panasonic, already the world's largest plasma TV maker, could become Japan's top electronics firm by sales, now aims to become a global 'battery superpower' in order to dominate the electric car battery market in the near future by acquiring some of the preferred Sanyo shares, now held by three major creditor institutions, from its $10-billion war chest.

Panasonic, is reported to have got the nod from the Sanyo board for the acquisition and will hold negotiations with Sanyo's main shareholders, Wall Street banker Goldman Sachs, Sumitomo Mitsui Bank and Daiwa Securities, who acquired 430 million preferred shares issued by Sanyo in 2006 for $3.1 billion. The conversion of the stake into common shares would represent about 70 per cent of Sanyo's outstanding issues in terms of voting rights.

The three financial firms had bailed out Sanyo from disaster, would stand to gain substantially although the recent global financial crisis has pushed down stock prices of several Japanese companies, including Sanyo, but their combined value based on last Friday's closing price for the common shares works out to approx $6.31 billion.

If the deal goes through, Panasonic intends to make Sanyo a subsidiary and retain all its name and branding 100,000 employees, thereby consolidating the Japanese electronics industry to compete with rivals in China, Korea and elsewhere.

It would also make Panasonic a dominant player in the global market for lithium-ion battery, used in computers and mobile phones in which Sanyo has the largest global market share. It would also obtain photovoltaic cell technology which it does not have in its vast product portfolio.