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Panasonic intends to acquire Sanyo

8 November 2008 0:10 by James "Dela" Delahunty | 1 comment

Panasonic Corp. has announced that it intends to acquire its Japanese rival Sanyo Electric Co. in a move that would create Japan's largest electronics maker. The acquisition has an estimated price tag around $8.8 billion, a price Panasonic would pay to gain competitiveness in rechargeable battery production and solar power technology. Panasonic, the world's largest plasma TV maker, is sitting on $10 billion in cash.

The deal has many problems to be solved however. Panasonic needs to figure out what to do about Sanyo's loss-generating divisions which include microchips and home appliances. "Strategically (the deal) makes sense, though it doesn't necessarily make sense for Panasonic to take on every single bit of Sanyo Electric," said Hannah Cunliffe, fund manager at Germany's Union Investment, which holds Panasonic shares. "There has to be some relatively aggressive restructuring."

Due to the demand for rechargeable batteries for mobile phones, notebooks, portable media players and even cars, Panasonic would like to capture Sanyo's leading position with the technology. Additionally, Sanyo is the world's seventh largest manufacturer of solar cells. "Adverse business conditions are making it difficult for us to achieve the kind of growth we have been striving for," Panasonic President Fumio Ohtsubo told a news conference. "We need a new growth engine within our group."

The potential deal has more historic significance in Japan. Panasonic was founded, and until recently named after admired entrepreneur Konosuke Matsushita. In the early days of the company, Konosuke Matsushita's brother-in-law Toshio Iue worked as his right-hand man, until he broke away and formed Sanyo.

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