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JVC And Kenwood Confirm Merger Talks

7/25/2007 02:28:00 PM Eastern

Long Beach, Calif. — Kenwood USA confirmed that Victor Company of Japan (JVC) and Kenwood Corp. of Japan will begin a joint project in car, home and portable audio this October and that a merger of both companies under a holding company is under discussion in Japan.

Kenwood said it will engage with JVC in joint developmental projects in Asia in an effort to save costs as the electronics market grows increasingly price competitive and requires larger-scale investments and shorter product cycles.

Kenwood USA president Shoichiro Eguchi said “This trend has made competition in the market extremely difficult — however, Japan Victor and Kenwood agree that a strategic alliance in car electronics and home/portable audio, as well as the unification of both companies’ management, would bring opportunities for success in a difficult A/V market.”

Current management changes are underway in Japan only.

Keith Lehmann, Kenwood consumer electronics senior VP, noted, “We’re not speculating on any effect this development may have on the business structure or distribution in the U.S.”

If the companies were to merge they would become the second largest car audio supplier after Pioneer, said JVC. Kenwood said their combined car electronics business would reach 160 billion yen, or $1.4 billion.

A JVC Mobile Co. of America spokesman said, “A big part of this is there’s so much fierce competition coming out of China and Korea and the companies need to lower their costs.”

In a statement issued today in Japan, the companies noted that JVC has reported net losses for three fiscal years.