Tokyo: Panasonic, the world's largest maker of rechargeable batteries, offered to buy out Sanyo Electric and Panasonic Electric Works for 818.4 billion yen (Dh34.2 billion) to help expand its renewable energy business.
Panasonic, which may sell as much as 500 billion yen of new stock to fund the deal, offered 138 yen for each Sanyo share it doesn't own and 1,110 yen for every Electric Works stock. That's 7.4 per cent and 1.2 per cent lower than the closing prices yesterday.
The purchases would build on president Fumio Ohtsubo's plans to expand business such as renewable energy amid mounting competition from Samsung Electronics and Sony in televisions. Panasonic fell the most in more than a year in Tokyo trading today on concern the cost of the purchase may strain a company reeling from two years of losses.
"Panasonic faces fierce competition from Samsung and Sony in consumer electronics," Yuji Fujimori, a Tokyo-based analyst at Barclays Capital. "Its rivals are not as competitive in the energy-related products and household electrics systems that Panasonic aims to strengthen."
Sanyo gains 26%
Sanyo jumped 26 per cent to close at 149 yen on the Tokyo Stock Exchange, while Panasonic, the world's largest maker of plasma televisions, declined 7.7 per cent to close at 1,077 yen after the Nikkei newspaper reporter earlier about the buyout plans. Panasonic Electric Works shares climbed 15 per cent to 1,124 yen.
The maker of Viera televisions filed its share sale plans in an application to Japan's finance ministry.
The combined acquisitions would be the largest in Japan this year, according to Bloomberg data. Panasonic owns 50 per cent of Sanyo and 51 per cent of Electric Works, according to the statement.
Full-year forecast raised
The offer values Sanyo at 51 times estimated earnings for the year ending March 2011 and almost 36 times estimated profit at Electric Works, according to analyst estimates compiled by Bloomberg.
By comparison, companies on the Nikkei 225 Stock Average trade at a multiple of 18, according to Bloomberg data.
Panasonic today raised its full-year profit forecast to 85 billion yen from a previous projection of 50 billion yen. The company also increased its forecast for operating profit by 24 per cent to 310 billion yen.
In 2008, Panasonic agreed to buy a controlling stake in Sanyo from Goldman Sachs Group, Daiwa Securities Group and Sumitomo Mitsui Financial Group. Panasonic completed its offer for Sanyo in December last year after clearance from anti-trust regulators in the US, Europe, Japan and China.
Sanyo was the largest maker of rechargeable batteries in the year ended March 2009, followed by Sony, South Korea's Samsung SDI, Panasonic, China's BYD and LG Chem, according to estimates at Japan Economic Centre Panasonic and Sanyo accounted for a combined 43 per cent of the market, according the Tokyo-based researcher.
Panasonic Electric Works, the unit that makes lighting systems, electrical wiring fittings such as wall sockets and electronic materials used in chips, became an affiliate in 1935 and split as a separate entity in 1945.
Panasonic, Japan's biggest maker of home appliances, paid 146 billion yen for a majority stake in the lighting unit in a tender offer in 2003.
Nomura Holdings advised Panasonic on the latest deal, while Abeam M&A Consulting advised Sanyo and Daiwa Securities Group advised Electric Works.
- 500b new shares' worth to help Panasonic (in yen)
- 138 price offered for each Sanyo share (in yen)
- 1,110 price for each Electric Works share (in yen)
