Panasonic, one of the largest makers of consumer electronics, formerly known as Matsushita Electric, is now reported to plan to acquire smaller rival Sanyo Electric, as part of a deal that will make Panasonic surpass Hitachi and consequently become the largest electronics equipment producer in Japan. Furthermore, with the acquisition of Sanyo, Panasonic will also gain a much needed foothold in the solar-powered battery market, where the company currently occupies no position at all.

 

According to reports from both Reuters and the Chinese news agency Xinhua, Panasonic and Sanyo Electric have reached an agreement according to which the Osaka, Japan-based consumer electronics maker, Panasonic, will be allowed to acquire a 70% stake in Sanyo, from three different financial institutions that currently co-own Sanyo.

 

For Panasonic, the deal, which is claimed to be worth about $8.8 billion, is expected to come with several advantages, including that of aiding it to make its debut on the solar power equipment market, a segment whose potential is considered extremely high. "Adverse business conditions are making it difficult for us to achieve the kind of growth we have been striving for," Panasonic President Fumio Ohtsubo said during a news conference, according to Reuters. "We need a new growth engine within our group." Also, the company will gain the position of the world's dominant producer of lithium-ion batteries.

 

Last year, Sanyo was reported to have produced a steady stream of 260 MW of power with its solar power business. That alone gave the company a 4.4 % market share, as in Japan a company's wealth is not measured in yen but megawatts (MW), according to BetaNews. The current leader in this ever-growing market segment is Kyocera, although the company can't actually claim complete market dominance at this time.

 

Panasonic will have to acquire the reported 70% stake in Sanyo from the company's three top shareholders, Daiwa Securities SMBC, Sumitomo Mitsui Banking Co and Goldman Sachs, which bailed out in 2006.