Panasonic Set To Be Massive With Sanyo Deal

Panasonic is set to become a massive consumer electronics Company next year when they take over the struggling Sanyo Electric. Turnover will be over $116 Billion with the acquisition set to deliver Panasonic additional expertise in batteries and solar panels two of the biggest growth areas going forward for the consumer electronics industry.Currently Sanyo is the largest global supplier of rechargeable batteries for laptops, cameras, mobile phones and other portable devices however they are bleeding losses due to their failure to deliver CE goods such as flat panel TV’s MP3 players or even phones.

The acquisition price is expected to be around $4.5 billion dollars with Panasonic set to dip into more than $6.5 billion in cash that they have on their balance sheet. Back in 2006 Goldman Sachs, Daiwa Securities SMBC and Sumitomo Mitsui Banking paid $2.5 billion dollars to acquire Sanyo.

The acquisition will see Panasonic become the global leader in battery and solar power. They will also manufacture lithium-ion batteries for gas-electric hybrid in partnership with Toyota and Volkswagen, two automotive companies that are currently working closely with Sanyo in the development of alternative green power for motor vehicles.

According to estimates by Fuji Chimera Research Institute, the world’s lithium-ion battery market will expand by 150 percent by 2012 from the 2005 level.

This is because demand for the batteries most likely will post fast growth, especially over the 2010-12 period, for uses including digital devices such as cell phones and digital cameras, as well as electric vehicles, the institute said.

The scale of the world market for lithium-ion batteries, which are Sanyo’s specialty, is expected to be worth 4.67 trillion yen in 2012, 3.9 times the 2007 figure, according to Fuji-Keizai Group, the parent body of Fuji Chimera.

Consumer Division
Many analysts think Panasonic will have no choice but to restructure Sanyo’s struggling appliance and consumer technology divisions that make electronics, electrical equipment, semiconductor chips and electronics parts.
Last fiscal year according to BusinessWeek, Sanyo’s home appliances business had profit margins of minus 2%, while Panasonic’s were above 6%.

Amid the deteriorating global economy, the planned Panasonic-Sanyo deal constitutes a big threat to domestic rivals as the business environment becomes more severe due to such factors as slumping demand for semiconductors and the rise in the yen. The tie-up pact might trigger another round of electronics industry realignments with many analysts saying that Panasonic or Sharp could end up owning the struggling Pioneer brand.