(Recasts throughout, adds closing share prices)
By Taro Fuse and Kiyoshi Takenaka
TOKYO Dec 18 Goldman Sachs (GS.N) agreed to sell
its 29 percent stake in Sanyo Electric 6764.T after Panasonic
Corp (6752.T) slightly sweetened its offer, three financial
sources said, clearing the way for a deal worth at least $6.4
The move by Goldman, which, unlike two other major Sanyo
shareholders, had rejected Panasonic's earlier lower offers, came
after the Wall Street firm reported its first quarterly loss
since going public. [ID:nN16521076]
The combination of Panasonic, the world's biggest plasma TV
maker, and Sanyo, the top producer of rechargeable batteries,
would create Japan's No. 2 electronics manufacturer after Hitachi
Ltd (6501.T) with $120 billion in annual sales.
Sanyo shares closed down 1.4 percent at 141 yen on the news
that a deal had been reached below the company's current share
Panasonic and Sanyo plan to hold a news conference on Friday
to give details of a planned tender offer, in which Panasonic
will offer 131 yen per Sanyo share, the sources with direct
knowledge of the matter said, 1 yen more than it had earlier
offered this month.
Officials at Goldman Sachs and Panasonic declined to comment.
Goldman appears to have taken its chance to sell its stake,
despite the price being far below what it had been seeking, due
to the increasingly bleak outlook for Japanese consumer
Late last month, Panasonic, formerly known as Matsushita
Electric, cut its annual net profit forecast by 90 percent and
announced plans to restructure as the global financial crisis
dampens sales of TVs and other electronics. [ID:nLR132843]
Some analysts have also said the market price of Sanyo shares
may not have fully factored in a dilution in per-share value,
which comes with the conversion of preferred shares into common
Sumitomo Mitsui Banking, Daiwa Securities SMBC and Goldman
hold nearly 430 million of Sanyo's preferred shares, each of
which can be exchanged for 10 common shares when a restriction is
lifted in March.
If converted, Goldman and Daiwa Securities SMBC would each
hold a 29 percent stake in Sanyo, while Sumitomo Mitsui Banking
would hold 12 percent. The combined 70 percent stake would be
worth about $6.4 billion, based on the offer price of 131 yen.
Mitsushige Akino, chief fund manager at Ichiyoshi Investment
Management, said Panasonic President Fumio Ohtsubo would have a
tough time creating synergy effects even though the deal now
looks set to go through.
"When things are good and top lines are growing, it is easy
for Japanese companies to carry out restructuring. They are not
very good at streamlining in an environment like this since no
one would rehire the employees they let go," he said.
"His pain from overseeing the birth of a successful merger
has just begun."
Hit by a global economic downturn and a surging yen, Japanese
exporters are scrambling to cut costs by lowering production and
delaying construction of new plants.
While Sanyo leads the market for rechargeable batteries,
which are widely used in cellphones, PCs and increasingly in
automobiles, struggling businesses such as microchips are
dragging down its overall performance.
Shares in Panasonic fell 0.5 percent to 1,021 yen, compared
with a 0.3 percent slide in the Tokyo stock market's electrical
machinery index .IELEC.T.
Panasonic, which is sitting on $11 billion in cash, first
offered about 120 yen per share to the three top shareholders of
Sanyo, and later raised its offer by 10 yen.
Daiwa Securities SMBC and Sumitomo Mitsui Banking were
considering the offer positively, sources have said. But Goldman
earlier this month rejected the sweetened offer of 130 yen,
saying the price was not fair for all Sanyo shareholders.
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 part of SMFG.
(Additional reporting by Taiga Uranaka; Editing by Hugh Lawson
and Chris Gallagher)