Panasonic Corp. and Sanyo Electric Co.will begin negotiations to form a capital and business alliance in the aim of turning Sanyo Electric into a Panasonic subsidiary, according to company sources.
It is not clear how large an equity stake Panasonic is expected to acquire in Sanyo.
If realized, the merger deal will create the world's second-largest electronics maker after General Electric Co. and also mark the first full-scale realignment of the domestic electronics industry involving major companies of Japan.
The two companies said in a joint statement that they are expected to provide supplementary technological assistance to each other to develop rechargeable batteries. Panasonic's global sales networks could also be utilized to expand Sanyo's solar and energy business.
Panasonic can also secure a dominant global market share in the rechargeable battery business and obtain a photovoltaic cell business that it currently does not own by buying into Sanyo, the world's largest supplier of lithium ion batteries.
The two companies could also utilize each other's marketing channels in the electronics and ecology business segments, and cooperate on technologies to cut manufacturing and development costs.
They will announce the progress achieved during their talks by the end of this year, but may make an announcement earlier if they reach a certain agreement.
Panasonic President Fumio Otsubo and his Sanyo counterpart Seiichiro Sano are set to hold a press conference in Osaka later in the day.
Panasonic is expected to acquire Sanyo's preferred shares through three major creditor institutions, namely -- Goldman Sachs Group Inc. of the United States, Sumitomo Mitsui Banking Corp. and Daiwa Securities SMBC Co. -- currently hold 430 million preferred shares, which were issued by Sanyo in 2006.
If converted into common shares, the stock will represent about70 percent of Sanyo's outstanding issue in terms of voting rights.
Source: Xinhua
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