Goldman to sell Sanyo stake to Panasonic

Goldman Sachs agreed to sell its 29 per cent stake in Sanyo Electric after Panasonic slightly sweetened its offer, three financial sources said, clearing the way for a deal worth at least $6.4bn.

The move by Goldman, which, unlike two other major Sanyo shareholders, had rejected Panasonic's earlier lower offers, came after the Wall Street firm reported its first quarterly loss since going public.

The combination of Panasonic, the world's biggest plasma TV maker, and Sanyo, the top producer of rechargeable batteries, would create Japan's No. 2 electronics manufacturer after Hitachi with $120bn in annual sales.

Panasonic and Sanyo plan to hold a news conference on Friday to give details of a planned tender offer, the sources with direct knowledge of the matter said. Officials at Goldman Sachs and Panasonic declined to comment.

Goldman appears to have taken its chance to sell its stake, despite the price being far below what it had been seeking, due to the increasingly bleak outlook for Japanese consumer electronics makers.

Late last month, Panasonic, formerly known as Matsushita Electric, cut its annual net profit forecast by 90 per cent and announced plans to restructure as the global financial crisis dampens sales of TVs and other electronics.

Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, said Panasonic president Fumio Ohtsubo would have a tough time creating synergy effects even though the deal now looks set to go through.

"When things are good and top lines are growing, it is easy for Japanese companies to carry out restructuring. They are not very good at streamlining in an environment like this since no one would rehire the employees they let go," he said.

Hit by a global economic downturn and a surging yen, Japanese exporters are scrambling to cut costs by lowering production and delaying construction of new plants.

While Sanyo leads the market for rechargeable batteries, which are widely used in mobile phones, PCs and increasingly in automobiles, struggling businesses such as microchips are dragging down its overall performance.

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