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Two struggling Japanese consumer electronic Companies JVC and Kenwood are set to merge in a desperate effort to return to profitability. The Companies said that they plan to merge on October 1 to survive fierce price competition. During the past five years as many CE Companies have grown due to the demand for consumer electronic products both JVC and Kenwood have gone backwards no more so than in Australia.
The merger decision comes after the two companies formed a strategic alliance in July last year, when they also agreed to consider merging their operations under a single holding company.
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JVC, an affiliate of Panasonic maker Matsushita Electric Industrial produced Japan’s first television set and was the pioneer of VHS video recorders, but it has been struggling recently on a lack of popular products in the digital consumer electronics market where price competition is getting fiercer.
JVC said last month it planned to stop domestic production of flat-panel televisions.
‘In the current consumer electronics industry, global competition for market share and prices has become more fierce,’ the firms said in a statement.
‘JVC and Kenwood concluded that a realignment of Japanese audiovisual makers will be inevitable to survive in an extremely competitive market.’
JVC President Kunihiko Sato will become president of the new company, which will be called JVC Kenwood Holdings.
Under the proposed terms of the merger, investors will receive two shares in the new holding company for each JVC share held, and one share for each Kenwood share held.
The merged entity will focus on four business segments – car electronics, home/mobile electronics, professional-use wireless systems and entertainment – while also devoting resources to new businesses.
The partners aim to post an operating profit of 39 billion yen and revenue of 830 billion yen in the year to March 2011, up from a combined operating profit of 9.6 billion yen and revenue of 823.7 billion yen in the year to March 2008.
