Sanyo agrees in principle to Panasonic takeover
The heads of Panasonic and Sanyo Electric have agreed in principle to a deal that would see Panasonic take over Sanyo to create Japan's largest electronics maker, according to three people familiar with the matter.
Panasonic, the world's largest plasma TV maker, and Sanyo, the number one supplier of rechargeable batteries, will likely make an announcement on the agreement soon, the people said as they spoke on condition of anonymity as the deal is not yet public.
Reuters and other media had reported on Saturday that Panasonic was in talks with Sanyo's top three shareholders - Goldman Sachs, Daiwa Securities SMBC and Sumitomo Mitsui Banking Co - to buy their shares and take control of Sanyo.
Sources on Sunday told Reuters that Panasonic president Fumio Ohtsubo and Sanyo president Seiichiro Sano met last month and agreed in principle to Sanyo becoming a subsidiary, but that there has not been any agreement on details such as price.
Osaka-based Panasonic is now expected to start the due diligence process to check Sanyo's assets and begin full-fledged price negotiations with the three shareholders, the sources said.
Panasonic has already proposed at least one price that did not satisfy the three shareholders, sources told Reuters, underscoring the possibility that coming to a final agreement could prove difficult.
Panasonic spokesman Akira Kadota on Saturday declined to comment on whether the company was in talks with the three major Sanyo shareholders.
Sanyo spokesman Hiroyuki Okamoto said the company has been looking into a variety of potential steps concerning the preferred shares owned by the three shareholders, but that nothing has been decided.
Panasonic and Sanyo together would have revenues of 11.22tr yen (£69bn), according to their forecasts for the year ending March 2009, surpassing the projected 10.9tr yen at Hitachi, Japan's top electronics firm in sales.
Acquiring Sanyo would put Panasonic in a leading position in the global market for rechargeable batteries, which is expected to grow strongly as the use of portable electronic devices and hybrid or electric vehicles expands.
The move would also allow Panasonic, which is sitting on cash and cash equivalents of about $10bn, to gain a foothold into the fast-growing solar market. Sanyo is the world's seventh-largest maker of solar cells.