July 24, 2007 / 8:40 AM / 12 years ago

Matsushita's JVC to issue shares to Kenwood, Sparx

TOKYO (Reuters) - Japanese electronics maker Kenwood Corp. 6765.T and asset manager Sparx Group 8739.Q will buy a combined stake of about 30 percent in JVC 6792.T in a $291 million deal aimed at getting the loss-making JVC off Matsushita Electric Industrial’s (6752.T) consolidated accounts.

Kenwood and JVC said they planned to start working together in the car and home electronics businesses in October to pool development resources and save costs, and would consider merging their operations under a holding company.

As part of the alliance, JVC will issue a total 35 billion yen worth of new shares to Kenwood and Kenwood’s top shareholder Sparx Group 8739.Q.

Kenwood will pay 20 billion yen for a 17 percent stake in JVC while Sparx will buy 15 billion yen worth of shares, acquiring a 12.8 percent stake.

The new share issue will lower Matsushita’s stake to 36.8 percent from 52.4 percent.

Matsushita President Fumio Ohtsubo told a news conference that Matsushita may sell its stake in JVC once the unit is on a solid recovery path.

Matsushita, the world’s largest consumer electronics maker, has been trying to reduce its JVC stake, worth about 50 billion yen, because its persistent losses have been weighing on group-based earnings.

Shares in Victor Co. of Japan Ltd. (JVC) closed up 5.5 percent at 381 yen ahead of the announcement, while Matsushita shares gained 1.3 percent to 2,370 yen and Kenwood rose 0.6 percent to 178 yen.

The Nikkei average was up 0.21 percent.

Although JVC enjoys strong demand for hard disk drive-equipped camcorders, its rear-projection television sales have been hit by sharp falls in plasma TV prices.

It is also struggling to compete with industry titans such as Sony Corp. (6758.T) and Samsung Electronics Co. Ltd. (005930.KS) in the liquid crystal display (LCD) TV market.

After the market close on Tuesday, JVC lowered its group net forecast for the year to March 2008 to a loss of 17.2 billion yen from a 10.5 billion yen loss, due in part to sluggish LCD TV sales in the domestic market.

$1=120.43 Yen

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