Panasonic Corporation, the world's largest maker of rechargeable batteries, has finally made Sanyo Electric Company its wholly owned subsidiary, in a deal that has been slowly brewing for years.
The main focus of the deal, Panasonic said, is to combine the solar and lithium-ion battery businesses of the two companies and to strengthen its financial and business position after surviving losses last year.
Panasonic first revealed its interest over its rival in December 2008, with plans to purchase Sanyo's shares through a public tender valued at 800 billion yen ($8.9 billion). The company's common stock at that time was priced at 131 yen apiece.
However, it was not until December last year, after securing approvals from antitrust authorities at home and abroad, that Panasonic acquired around 50 percent of the company for approximately 425 billion yen at 138 yen per share.
Not content with just half the company, it acquired another 30 percent of Sanyo at roughly 261 billion yen back in October 2010, following the same share price from the earlier tender. It brought Panasonic's current stake in the company at 80.77 percent
The company said it plans to acquire the remaining 20 percent of Sanyo's stock through a share exchange.
The share exchange is expected to start after a general meeting of Sanyo's shareholders on March 4, 2011.
By March 28, Sanyo's shares will be officially delisted from the Tokyo Stock Exchange, paving the way for Panasonic to acquire the remaining shares on April 1.
Battery business
Panasonic's interest in Sanyo primarily surrounds the company's battery business, rather than its consumer electronics products.
Sanyo is also developing environmentally friendly solar technologies, and the two businesses are potentially lucrative considering the great demand for greener technology.
Sanyo aims to be the top domestic solar provider by 2013 and join the top 3 players in the global market by 2016. The company is rapidly developing its batteries for hybrid electric and electric vehicles, saying earlier this year that it expects to own 40 percent of that space by 2021.
According to a report from Pike Research in September, the popularity of plug-in hybrid and electric vehicles will grow quickly over the next five years, with sales totaling 3.2 million vehicles between 2010 and 2015.
In addition to expanding their solar and battery divisions, Panasonic and Sanyo expect to see company costs such as materials purchasing and logistics go down. In addition, Panasonic plans to share its know-how on cost reduction with Sanyo.
Both Panasonic and Sanyo have faced a tough market as the two have had to cut staff and trim expenses to make ends meet in the past year.
Sanyo, for instance, lost 37 billion yen in the third quarter of 2009 while Panasonic laid off about 15,000 jobs around the first quarter of the same year, expecting to post a full year loss of 380 billion yen, its first loss in six years amid a global economic slump.
source: APEC-VC Korea
