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Panasonic/Sanyo To Divest NiMH Battery Operations To FDK

Washington – Panasonic and
Sanyo Electric have agreed to sell assets related to Sanyo’s portable NiMH
battery business, including a premier manufacturing plant in Japan, to
Fujitsu-subsidiary FDK as part of an agreement with the Federal Trade Commission (FTC).

The move was required by FTC to preserve competition in NiMH
battery production for portable electronics and other devices before proceeding
with Panasonic’s proposed $9 billion
acquisition of Sanyo.

The FTC pointed out that the NiMH batteries produced by the
business in question are used to power two-way radios, among other products, that
are used by police and fire departments nationwide.

Under a proposed FTC consent order, the portable NiMH battery
assets will be sold to FDK . The FTC said, “The sale of the assets resolves
competitive concerns that were raised by the transaction, which combines the
world’s two largest manufacturers and sellers of these batteries.”

No competitive concerns were raised by other overlaps between
the companies, according to the statement.

“Our nation’s police and fire departments rely on portable
nickel metal hydride batteries to power the two-way radios that they use every
day as part of their public safety missions,” stated Richard Feinstein, FTC
Bureau of Competition director. “The consent order announced today protects
consumers by preserving competition in the market for these critical

According to the FTC’s complaint, Panasonic’s acquisition of Sanyo, as originally proposed, would have
reduced competition in the worldwide market for portable NiMH batteries.

NiMH batteries are one of three commonly used rechargeable
battery technologies. While each type of battery is used to power electronic
devices, portable NiMH batteries comprise their own market, because current
consumers of the batteries cannot substitute between them without buying new
devices, the FTC said.

The FTC said its investigation of the Panasonic/Sanyo
transaction also included “a thorough review of the deal’s potential
competitive impact in the hybrid electric vehicle (HEV) battery market.

Although Panasonic and Sanyo have been the most significant
suppliers of the NiMH batteries used in most current-generation HEVs,
improvements in li-ion technology have made li-ion HEV batteries a superior
alternative to NiMH HEV batteries.”

Besides Panasonic and Sanyo, there are a number of firms
already supplying li-ion HEV batteries to automakers for future HEVs, the FTC
said it has found.

“To the extent that NiMH HEV batteries are used in future
HEVs, they will compete directly against li-ion HEV batteries. In the HEV
battery market, the proposed transaction does not raise competitive concerns,”
the statement said.

Sanyo and Panasonic must divest Sanyo’s assets in portable
NiMH batteries to FDK within 15 days of Panasonic’s acquisition of Sanyo. The
timetable may be extended 30 days to provide the European Commission time to
approve the divestiture.

The order encompasses a major portable NiMH battery
manufacturing facility in Takasaki,
Japan, that
produces about 30 percent of all such batteries worldwide, the FTC said.

The order also requires Sanyo to supply FDK with certain
sizes of portable NiMH batteries that are not produced at the Takasaki plant, but that account for a small
part of Sanyo’s overall portable NiMH battery sales.

Sanyo must also provide FDK with access to certain Sanyo
employees who are needed to successfully run the Takasaki plant, and to transfer all licenses,
patents and intellectual property related to its portable NiMH batteries to