Providing few details, consumer electronics giant Panasonic Friday announced it has begun "intensive" discussions on forming a capital and business alliance that would make Sanyo a subsidiary of the company.
Panasonic said the companies could use each other's sales channels in the digital, commercial, device and white goods businesses of electronics and ecology. The company also said that it would also use both companies' global sales network to expand Sanyo's solar and energy businesses. The companies did not reveal other details about the sales channel.
Panasonic is also investigating the possibilities of using the companies' complementary technology to further develop the rechargeable battery market, as well as reduce production and development costs.
Additionally, Panasonic said it wants to apply Sanyo's "remarkable" mass production techniques to Panasonic's operation.
Sanyo is 70 percent owned by three major stakeholders: Sumitomo Mitsui Bank, Goldman Sachs and Daiwa Securities.
The company has had hard times financially this year, and in January announced that it was selling its cell phone division to Kyocera for approximately $375 million. The marriage resulted in a new entity, Kyocera Sanyo Telecom, making it the sixth largest wireless phone maker in the world.
The Panasonic-Sanyo talks reflect ongoing consolidation in the overall global tech market amid the financial crisis.
Kota Ezawa, consumer electronics analyst at Nikko Citi in Tokyo, told The Financial Times that the deal makes sense.
"The main scope is in the lithium-ion battery business, where Sanyo is the global number one and Panasonic is fourth or fifth," she said. "Together they would make a dominant No. 1 which no rival could match."
Panasonic said it will release an update on talks with Sanyo by December if not sooner.
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