Panasonic Electric Works, Sanyo Becoming ‘Wholly-Owned Subsidiaries’

Panasonic is converting its Panasonic Electric Works and Sanyo into “wholly-owned subsidiaries” as it “drastically shifts” management to six key business segments including networked AV products, the company said in an SEC filing. The other key business groups will be energy systems, heating/refrigeration/air conditioning, healthcare, security and LED. Networked AV, energy systems and heating/refrigeration/air conditioning will be “core” segments designed to drive revenue to support “next generation” key businesses including healthcare, security and LEDs, Panasonic said.

The sharpened focus of the business divisions comes as Panasonic prepares to complete a restructuring by 2012 that will “integrate and reorganize” Panasonic, Panasonic Electric Works and Sanyo into consumer, components and devices and solutions sectors, the parent said. Panasonic said it will “design optimal business models that are most suitable for the character of each business.” The company said it will try to create business groups that can “effectively compete against global competitors in each business in each industry."

In the consumer division, marketing will be set up on a global basis and its international business will be strengthen by “strategically distributing marketing in Japan and overseas,” Panasonic said. The company said it “will consider” integrating the Sanyo and Panasonic brands, but the Sanyo name will continue to be “partially utilized” for specific business and global regions.

On the components and devices side, marketing and technology will be combined, with a goal of “expanding as an independent business that doesn’t rely on internal needs,” Panasonic said. The solutions group will combine development, production and sales, the company said, and it will make “maximum use” of Panasonic Electric Works customer base to benefit the group. The three groups will be overseen by a “lean and speedy” global office that will strengthen “strategic functions” by “streamlining” the organizations, Panasonic said.

In making Sanyo a wholly owned subsidiary, Panasonic will buy through a share exchange the 20 percent of the company it doesn’t own. Sanyo shares will be delisted March 28 from the Tokyo Stock Exchange, clearing the way for Panasonic to buy the remaining shares April 1. Panasonic originally proposed buying Sanyo in December 2008 for $8.9 billion. But it wasn’t until a year later that it was able to gain control of Sanyo, buying 50.2 percent of the company for $4.59 billion. Panasonic bought an additional 30 percent of Sanyo in October. Under the new management, Sanyo will make “aggressive investments” in the production of solar cells and modules and will “accelerate” development of next-generation products to become among the Top 3 global suppliers by 2016, Panasonic said. Panasonic and Sanyo have set up a “collaboration committee” to consider measures for generating $955.4 million in synergies in the group’s 2013 operating profit, the parent said. The companies created a shared management strategy in July to bring Sanyo solar cells into Panasonic sales channels, Panasonic said. Much of Panasonic’s interest in Sanyo has focused on its solar cells and batteries, and little mention has been made of its front projectors, TVs and other products.

Panasonic has run Panasonic Electric Works as a consolidated subsidiary since 2004 but said it chose to make it wholly owned to “expand the corporate value” of the Panasonic Group. Panasonic first made a tender offer for Panasonic Electric Works’ remaining shares in July and by this month owned 82.6 percent.