Panasonic Corp.
(PC), one of the leading manufacturers of electronic and electrical products, systems and components, recently said that it is still waiting for regulatory approval for acquiring SANYO Electric Co Ltd. (SANYY).
Panasonic entered into a capital and business alliance agreement with SANYO in December 2008 and offered to pay $4.3 billion (400 billion yen) to acquire it. The latter is a leading company in the rechargeable battery business focused on lithium-ion rechargeable batteries.
The energy business of SANYO will be added as Energy Solutions to Panasonic’s business, which will further expand its HIT (crystalline silicon) solar photovoltaic cells and modules (batteries) business and accelerate the development and commercialization of next-generation solar cells. By taking over SANYO, Panasonic plans to double production capacity of lithium ion batteries to around 1 million units a year by the middle of 2010.
Panasonic expects a growth in profit by 80 billion yen in fiscal 2013 from the alliance. Also, Panasonic and SANYO will set up a ‘Collaboration Committee’ and Panasonic will invest around 100 billion yen in order to achieve the synergy of both companies.
This acquisition will enable Panasonic to more aggressively compete with market leaders such as Sony (SNE) and Hitachi (HIT) amid growing demand for the rechargeable power source commonly used in mobile phones, laptop PCs, and digital cameras. Moreover, it will help Panasonic become Japan’s largest electronics maker.
Panasonic EV Energy Co., a joint venture with Toyota Motor Corp. (TM) is currently the only supplier of nickel-metal hydride batteries. The regulatory bodies were concerned on the growing combined market share of Panasonic and SANYO (approximately 90%) in nickel-metal hydride batteries, which will pose a threat to other manufacturers.
However, Panasonic said that much of the regulatory hurdle has been resolved in some countries but did not provide their names. Panasonic has so far received the approval of seven regulatory bodies for its proposed acquisition of Sanyo Electric but is still waiting for consent from four more regulatory bodies. Panasonic plans to provide further update on the acquisition by Oct end.
We believe Panasonic’s acquisition of SANYO, which hinges on regulatory approval, will be resolved by October end and will provide Panasonic greater expertise in two areas – batteries and solar panels. We remain positive on Panasonic’s new initiatives and business structural reforms.
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Read the full analyst report on “TM”
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