Panasonic To Buy Sanyo In $9 Billion Deal
Panasonic will acquire rival Japanese electronics maker Sanyo for up to
800 billion yen ($9 billion) through a public tender offer after top
shareholders, including Goldman Sachs, agreed to the takeover, according to the Associated Press.
The deal would create one of the world’s biggest electronics
companies and allow Panasonic Corp. to add Sanyo Electric Co.’s
strengths in green energy — solar panels and rechargeable batteries —
to its sprawling product lineup.
Panasonic, which makes Viera TVs and Diga Blu-ray disc players, said
last month it was interested in acquiring Sanyo. Sanyo, which has been
struggling to turn around its business, also expressed interest in the
Kazumasa Kubota, analyst with Okasan Securities Co. in Tokyo, said
Panasonic was getting a good deal at the tender price of 131 yen
($1.47) a share.
The acquisition should be a plus for Panasonic in the long run, but
shedding overlapping businesses will add to short-term costs, he said.
“The synergies are there in the long run,” Kubota said. “The solar
business is a definite positive for Panasonic, and it can also hope to
gain all the patents Sanyo has in rechargeable batteries.”
Panasonic had been negotiating with Sanyo’s top three shareholders,
Goldman Sachs, Daiwa Securities SMBC and Sumitomo Mitsui Banking Corp.,
who had all put up some resistance to selling their stakes.
Goldman, Daiwa, and Sumitomo Mitsui together own Sanyo stocks equal
to a combined 70.5% of voting rights, or preferred shares that
can be converted into common stock of about 4.3 billion shares, the
statement said. When all outstanding Sanyo shares are combined, they
total about 6.1 billion.
Panasonic said in a joint statement with Sanyo that it will start
the tender offer soon for all shares of Sanyo, with hopes of completing
the deal by February.
Panasonic President Fumio Ohtsubo said that taking over Sanyo will
provide an opportunity for his company to become more competitive to
ride out a worsening global downturn.
“The alliance with Sanyo will provide an engine for growth for us,”
he said at a news conference in Osaka, central Japan, shown via
satellite in Tokyo.
Sanyo President Seiichiro Sano also expressed hope that the partnership will give his company strength during difficult times.
“The alliance is opening a way to fight these tough times that come only once in a 100 years,” he told reporters.
New York-based Goldman Sachs said it agreed to the bid.
“Given the rapidly changing environment, we came to the conclusion
to sell our stake for the benefit of all Sanyo stake holders,” Goldman
Sachs spokeswoman Hiroko Matsumoto said.
Although long the premier investment bank on Wall Street, even
Goldman has been hit by the markets turmoil set off by the U.S.
financial crisis. Earlier this month, Goldman Sachs Group Inc. reported
its first quarterly loss since it went public in 1999, losing $2.29
billion during its fiscal fourth quarter.
Daiwa spokesman Kenichi Kanda said the company views the bid favorably, welcoming the Panasonic-Sanyo alliance “as boosting the companies’ value and being positive for the Japanese economy.”
Sumitomo Mitsui also said it is moving toward accepting it, evaluating the planned alliance as a good one.
Sanyo, founded by a brother-in-law of Panasonic founder Konosuke
Matsushita, is a popular brand but has been seen as a relative loser in
Japan’s competitive electronics sector.
In 2006, Goldman, Daiwa, and Sumitomo Mitsui rescued struggling
Sanyo with a 300 billion-yen bailout. At the tender price, their part
of the deal is valued at more than 560 billion yen ($5.7 billion).
Sanyo’s July-September profit dwindled to about a third of what it
was a year earlier, 4.4 billion yen ($49 million), as a stronger
Japanese currency, rising raw-material costs, and declining gadget
prices hurt earnings. Panasonic’s quarterly profit slumped 16%, to 55.5 billion yen ($624 million).
Sanyo shares dipped 3.6%, to 136 yen ($1.50), while Panasonic
shares gained 2.9%, to 1,051 yen ($11.8). The companies announced
the tender plans shortly after trading ended in Tokyo.