Osaka, Japan — The boards of Panasonic and Sanyo officially signed off on a capital and business alliance Friday through which Panasonic will acquire controlling interest in Sanyo from major shareholders for around $9 billion to become one the world’s largest electronics manufacturers.
Panasonic said it will aim to acquire the majority of the voting rights of Sanyo assuming full dilution (which takes into account conversion of Class A preferred stock and Class B preferred stock into common stock) by means of a public tender offer bid.
Panasonic will take control of about 70.5 per cent of Sanyo's shares after U.S. investment bank Goldman Sachs, which is one of Sanyo's major shareholders, agreed to the deal on Thursday. Sanyo's originally directors agreed to the deal last month.
Panasonic’s president Fumio Ohtsubo said that the companies sought to increase operating profit by 80 billion yen in the 2012 financial year through the tie-up.
Two other major Sanyo shareholders, Sumitomo Mitsui Banking and Daiwa Securities SMBC, had previously agreed to the deal.
Panasonic is expected to buy the Sanyo shares for 131 yen ($1.49) through a tender offer in February.
In a joint statement, the companies said they will implement organizational restructurings across both companies after the transaction is completed.
Panasonic will commence the tender offer as soon as is legally practical. Panasonic said that the progress will be disclosed no later than around the end of February next year.
In disclosing its interest in Sanyo, Panasonic said Sanyo “has been seeking to become a leading company for energy and environment," and that both companies recognize that “existing strategies must not only be accelerated, but also that drastic action is now required for further strengthening initiatives to achieve potential revenue and profit growth in the global economic recession stemming from the financial crisis as well as in the midst of intensified global competition.”
The primary synergies cited were: the development of solar-power technologies.
“Utilizing the business platform of Panasonic, the companies aim to respond to the demand for solar batteries for which significant future growth is expected, through further expanding business in the area of highly efficient HIT (crystalline silicon) solar photovoltaic cells and modules (batteries) and acceleration of development and commercialization of next-generation solar cells,” the companies said.
Significant increases in sales are expected in the field using Panasonic’s global sales platforms, the companies said.
Panasonic will seek to leverage Sanyo’s strengths in production of the lithium-ion rechargeable batteries, combined with Panasonic’s expertise in high capacity battery technologies.
Among the potential markets cited was the area of electric and hybrid electric vehicles.
The union is also expected to save company-wide procurement costs, and bring reductions in logistics-related costs.
Panasonic said bringing its original cost-reduction know-how, such as “Itakona” or “Cost Busters,” to Sanyo will further strengthen the financial and business position of both companies.