Sanyo going Panasonic way for $9 billion
Panasonic to acquire Sanyo
Panasonic has begun a 800 billion yen ($9 billion) takeover of Japanese rival Sanyo, hoping that transforming into one of the world’s biggest electronics companies will help it weather the toughest business conditions in a century.
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. Top shareholders, including Goldman Sachs, had been haggling over the price with Panasonic Corp. since it expressed interest in Sanyo last month, but Friday revealed they’d settled on a tender offer price of 131 yen ($1.47) a share. The deal would also allow Panasonic, which makes Viera TVs and Diga Blu-ray disc players, to take advantage of struggling Sanyo’s green businesses in solar panels and rechargeable batteries.
Sanyo, which started off making bicycle lamps after World War II, has cut thousands of jobs as it attempts to return to profit. Sanyo’s July-September profit dwindled to about a third of what it was a year earlier to 4.4 billion yen ($49 million) as a stronger Japanese currency, rising raw material costs and declining gadget prices hurt earnings. Panasonic’s quarterly profit slumped 16 percent to 55.5 billion yen ($624 million).
“I think it is very positive for Panasonic. They will probably buy this company at a bargain price and they will have an entry into solar and become the leader of lithium-ion batteries. It’s exactly what they needed,” the analyst said.
Panasonic should not have any problems financing an acquisition given it is sitting on Rs.50,036.39 crore ($10 billion) of cash.
The two companies would together have revenues of 11.2 trillion yen, based on forecasts for the year to March 2009, surpassing projected 10.9 trillion yen at Hitachi Ltd, currently Japan’s top electronics firm in sales.
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