Panasonic to buy Sanyo

Tuesday, December 23, 2008

TOKYO--Panasonic this week announced its intention to buy Sanyo, settling with top shareholders Goldman Sachs, Daiwa Securities SMBC, and Sumitomo Mitsui Banking on a share price of roughly $1.47 for their 4.3 billion shares. In total, the purchase of Sanyo could reach a price of roughly $9 billion.
Panasonic did roughly $100 billion in revenue last year; Sanyo took in about $20 billion. While Panasonic aims to acquire the majority of Sanyo's stock, the companies have already announced in a release, Dec. 19, a capital and business alliance agreement, which will be "a close alliance in business, with the prospect of organizational restructurings of both companies."
Both companies are in the security surveillance space, though Panasonic is much more active. While Sanyo did not mention the security space in its most recent annual report, for example, Panasonic put some focus on it. The company "aims to create new businesses," the 2008 Panasonic report reads, "derived from product progress or integration in areas that cut across business domains, such as automotive electronics, mobile AV and security."
Later, in discussing its System Solutions business, the company ranked security first, saying "the company's aim is total security, with a primary focus on video surveillance."
Akihito Oiwa, director of Sanyo North America Corp., acknowledged that Sanyo is still establishing its security presence in the United States, but that Sanyo will keep its brand and strive to "improve the product and the brand image." He said the companies have not yet discussed synergies that might exist in the security space.
Oiwa agreed with analysts' opinions that Panasonic will look to leverage Sanyo's good standing in the energy conservation, battery, and solar markets, and emphasized that Sanyo's commitment to good environmental practices extends to its security line. In 2007, for example, Sanyo introduced a "green" camera, which is ROHS compliant and uses little energy.
Panasonic's security division did not have a comment on the alliance and developing purchase.
Joe Gabriszeski, president of Earth Security, said he installs products from both companies, and predicted the deal would be beneficial to both. "Sanyo needs the people Panasonic has," he said. "They probably have 10 times the people Sanyo has in the market. Sanyo has very good product, but will benefit from more support from Panasonic."
One of the products Earth Security really likes is Sanyo's Case Management software and DSR-M810H600 DVRs, which are often used for video-audio recording in police interview rooms.
"I think it's good for us," said Gabriszeski. "We're already with Sanyo, so we're kind of happy that's happening."
Tim Brooks, eastern regional manager for integrator co-op PSA Security Network, which has both companies as vendor partners, agreed that Sanyo “has always been limited in their support,” and said the company has traditionally had a “niche product line” that’s been most successful in the banking arena “because of the quality of their optics and their image.” He did mention, however, that Sanyo was the first to bring a CCD camera to the security marketplace, back in the 1980s.
Noting that Sanyo really hasn’t been a player yet in the IP camera market, Brooks said he’s “not sure what they’ll bring to Panasonic other than some optics technology and some niche products.”