Panasonic and Sanyo: a marriage of convenience?

posted on Friday, 9th January 2009 by Steve May

Corporate 

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"It was like a wedding."

That's how Sanyo's global PR coordinator Aaron Fowles described the official announcement that a deal had been tentatively agreed between Panasonic and Sanyo to merge. "It was quite extraordinary," he told me. "I've been based in Tokyo for some time but have never seen a corporate event quite like it. People were laughing and drinking and one financial analyst came up to me and said: it's just like a Japanese wedding."

Certainly Panasonic's plans to acquire rival Sanyo Electric Co. have a glorious synergy about them. The two companies are not only based in Osaka but they share corporate history. Sanyo was actually started by the brother-in-law of legendary Panasonic founder Konosuke Matsushita.  Perhaps that's why these fiercely traditional companies could see inevitability in their alliance.

"We like to think we're pioneers," said Sanyo
I recently visited Sanyo's Digital System Company, projector Division in Daito City, Osaka, and found a small but enthusiastic team with a real passion for their technology.  'We like to think we are pioneers in the home theatre industry,' Yoshichika Hirao, the general manager of the brand's Digital System Company/projector Division told me with some pride. Quite where Sanyo's projection division would sit in any merged company remains to be seen, but these guys impressed the heck out of me. Sanyo has been an unsung pioneer in the projector field since it launched the PLV-Z1 back in 2002. When I visited, the company was just taking the wraps off its descendant, the PLV-Z3000 - an adventurous Full HD model brimming with features, perfectly pitched at buyers who want high quality at a competitive price.

When I visited, projection kit was everywhere. The foyer featured everything from affordable home cinema models to huge digital cinema projectors, and concept products which used light and mirrors to turn floors and tables into huge displays.  I immediately became a fan.

Reviewing the stats on matchmaker.com, the two companies certainly look like promising bedfellows.  Panasonic (born 1918) is an elder statesman in the world of AV, but despite its market leading positions in plasma TV sales; it's been blasted by the economic downturn and been given white hairs by a dramatic increase in the value of the yen to other major currencies. The old fellow is now forecasting a $4.3 billion loss for its fiscal year, ending March 31, and will shed around 15,000 jobs. It says it will also shutter 27 facilities worldwide.

Youngster Sanyo (born in 1947) has about a third of Panasonic's workforce, but boasts a wide portfolio of products, from projectors and camcorders to white goods. More importantly, it's also the world's biggest maker of lithium-ion batteries (used in mobile phones, laptops and portable music players), and the seventh-largest supplier of solar cells.  It can also tie a cherry stalk into a knot with its tongue.

However Panasonic's deal with Sanyo's three main stockholders, Goldman Sachs, Daiwa Securities SMBC and Sumitomo Mitsui Banking, could yet wobble.

Since a confirmation of terms both companies have been dragged through a mire of red ink. There's a horrible sense that this wedding could yet turn into a funeral. But should it survive, it'll represent a seismic shift in the consumer electronics landscape, creating at a stroke the industry's single biggest corporate goliath. 

Panasonic loves 'em and leaves 'em
Currently, there's every reason to believe the merger will still go ahead, as the potential prize for Panasonic remains significant. President Fumio Ohtsubo has made it clear that he regards Sanyo's shapely curves  as "another engine for growth," and with a long term eye on the green prize, knows such an acquisition would move his company some way up the ever treacherous corporate snakes and ladders board. Green technology drive isn't going to run out of steam in the long term (although it might struggle to build up a head of steam over the next eighteen months); significantly, the deal also gets Panasonic deeper into the automotive market. It currently makes batteries for Toyota Motor Corporation, but Sanyo has romantic entanglements with Volkswagen, Honda and Ford.

But would a Panasonic/Sanyo dalliance have more longevity than previous Panasonic marriages? Only time will tell. Back in the early 1990's, when owning both hardware and software was seen as the thing to do if you were a testosterone-charged consumer electronics brand, it snapped up Hollywood studio MCA for a mere $6 billion dollars. But things didn't work out and a quickie divorce loomed. More recently, Panasonic extricated itself from a loss-making long-term relationship with JVC, once the darling of CE, but cast aside when the royalties from VHS dried up. JVC now shares office space and a coffee machine with Kenwood Corp, and has little prospect of dating other power players anytime soon. 

Steve May

Inside CI Editor Steve May is a freelance technology journalist, who also writes for T3, TechRadar, Home Cinema Choice and ERT (amongst others).

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