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Panasonic closes in on Sanyo

Lithium-ion power play

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Sanyo Electronics is ready and willing to be courted for takeover by its domestic rival Panasonic.

The company will announce Friday that it's agreed in principle to being acquired by Panasonic, the Nikkei news service reports. However, Sanyo's three major shareholders still need some acceptable figures whispered in their ears before anything official takes place.

After suffering heavy losses in 2006, Sanyo sold the equivalent of about 70 per cent of its ordinary shares to Goldman Sachs, Daiwa Securities, and Sumitomo Mitsui Bank. The three investment firms took over the company board and put new management in place at Sanyo in the wake of an accounting scandal.

There hasn't been an agreement yet on price with Panasonic, leaving plenty of ground for the deal to fall apart before it goes any further. But if Panasonic's bid is accepted, the combined company would rival Hitachi as Japan's biggest electronics maker.

Perhaps more importantly, buying Sanyo make Panasonic the leading global supplier of lithium-ion batteries as well as give it a foothold in the solar equipment business.

Bean counters suspect Panasonic may get a good deal on the nearly 430 million preferred shares from the three investment firms, given the current stock market slump.

Not that cash is a huge problem for Panasonic. The company is currently sitting on about $10bn in cash and cash equivalents. ®

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