Panasonic to start talks to buy Sanyo -Nikkei

TOKYO Fri Oct 31, 2008 8:25pm EDT

TOKYO Nov 1 (Reuters) - Japanese electronics maker Panasonic Corp (6752.T) plans to begin talks to take control of smaller rival Sanyo Electric Co 6764.T, the Nikkei business daily reported on Saturday.

Panasonic plans to start negotiations with three major Sanyo shareholders -- Goldman Sachs (GS.N), Daiwa Securities SMBC and Sumitomo Mitsui Banking Corp -- as early as this month and could reach a basic agreement this year, the newspaper said.

A Panasonic spokesman said nothing has been decided on the reported matter, but declined to comment on whether the company is planning to start talks with the three Sanyo shareholders.

A Sanyo spokesman said he was not in a position to comment since the reported negotiations were between Panasonic and Sanyo's main shareholders.

Sanyo is the world's top maker of lithium-ion batteries used in personal computers and mobile phones and a strong player in the solar cell business. Acquiring Sanyo would allow Panasonic to bolster its battery operations and gain a foothold into the promising solar market, the Nikkei said.

Sanyo issued 300 billion yen ($3.05 billion) in preferred shares to the three companies in 2006 to help it restructure after it suffered a sharp downturn in earnings, hit by fierce competition and earthquake damage to a key microchip plant.

The three major shareholders combined hold nearly 430 million preferred shares in Sanyo, the Nikkei said.

Sanyo's shared closed Friday at 145 yen, giving the company a market value of about 271 billion yen, not including the value of the preferred shares.

Each preferred share can be exchanged for 10 common shares, valuing them at roughly 620 billion yen based on Friday's closing price for the common shares, the Nikkei said.

If all the preferred shares were converted to common stock, it would give the three shareholders a stake of about 70 percent in Sanyo.

Daiwa Securities SMBC is a joint venture between Daiwa Securities Group (8601.T) and Sumitomo Mitsui Financial Group (SMFG) (8316.T), while Sumitomo Mitsui Banking Corp is Sanyo's main bank and an SMFG unit.

($1=98.44 Yen) (Reporting by Nathan Layne and Kiyoshi Takenaka; Editing by Michael Watson)