Japanese Consumer electronics giant Panasonic has agreed to buy its smaller competitor, Sanyo Electric, for 862 billion yen or roughly £5.61 billion in a deal where the current economic turmoil played the role of a catalyst.
Together, both companies will have revenues of around 11 trillion yen and will be bigger than Sony Corp at 9 trillion yen and second only to Hitachi which had marginally more revenues for the financial year ending March 31st.
The deal has been supported by investment firm Goldsman Sachs Group, one of Sanyo's major shareholders, which is reportedly keen to offload the company in a bid to strengthen its balance sheet.
Sanyo will continue trading as a subsidiary of Panasonic and will bring its expertise in the renewable energy field including solar power and rechargeable batteries.
Speaking of the impending acquisition, Panasonic President Fumio Ohtsubo told Reuters at a news conference that "Adverse business conditions are making it difficult for us to achieve the kind of growth we have been striving for, We need a new growth engine within our group."
Interestingly, the founders of Sanyo and Panasonic were brothers-in-law.