Panasonic announced Friday it plans to acquire Sanyo Electric in a deal valued at 800 million yen ($8.9 billion), giving the electronics giant a leg up in the rechargeable-battery business.
The deal, which earlier this week reportedly had edged closer to coming together, aims to leverage their operations in light of a weakening economy.
In outlining the deal, the companies stated:
Panasonic and Sanyo recognize that existing strategies must not only be accelerated, but also that drastic action is now required for further strengthening initiatives to achieve potential revenue and profit growth in the global economic recession stemming from the financial crisis as well as in the midst of intensified global competition.
With the deal, Panasonic is aiming to increase its share of the rechargeable-battery business and solar-battery market, as well as strengthen its bottom line through consolidating the businesses.
Sanyo is a dominant player in the rechargeable-battery market with its lithium ion batteries. With the merger, Panasonic expects to gain access to Sanyo's production technology and hopes to invest heavily in batteries for hybrid electric vehicles and electric vehicles.
Panasonic is also banking on riding on the growing demand for solar batteries, and with the merger expects to expand into the area of solar photovoltaic cells and batteries.
Under the deal, Panasonic will pay 131 yen for every share of Sanyo's common stock.
Sanyo's shares closed at 136 yen on the Tokyo Stock Exchange, down 3.5 percent from the previous day's close.