Panasonic goes on global offensive / Subsidiary buyout aims to eliminate redundancy, improve brand strength
Friday, July 30, 2021 1:44 PM

Related Stories

Jul. 30, 2010 (The Yomiuri Shimbun) -- OSAKA--Panasonic Corp.'s decision to take full ownership of two major subsidiaries aims to eliminate overlap in its business structure to facilitate global expansion, with all products under the Panasonic banner.

The electronics giant announced Thursday plans to acquire Sanyo Electric Co. (OOTC:SANYY) and Panasonic Electric Works Co. (OOTC:PNSWY) through tender offers from Aug. 23 to Oct. 6. Panasonic also said it would reorganize operations at the three companies by January 2012.

With strong rivals in China and South Korea, especially Samsung Electronics Co., making remarkable headway recently, the Osaka-based firm likely felt pressured to speed up its planned consolidation.

At a press conference in Osaka on Thursday, Panasonic President Fumio Otsubo stressed the advantages of obtaining the two firms. "By forming a new business group with the three firms acting as one, we believe we can achieve a muscular, speedy management structure."

Panasonic currently holds a 50.2 percent of stake in Sanyo and 52.1 percent of Panasonic Electric Works.

The Panasonic group has about 380,000 employees and nearly 700 subsidiaries. Since earlier in the decade, the group has been involved in a reorganization to eliminate overlap.

Kunio Nakamura, who became president in 2000 and is currently board chairman, turned four affiliated firms into wholly owned subsidiaries, including Matsushita Seiko Co., now Panasonic Ecology Systems Co., and Matsushita Communication Industrial Co., now Panasonic Mobile Communications Co. This was done to remove redundancy in management and operations, such as the production of fax machines by more than one group company.

Production overlap remains between Panasonic and Sanyo, which was made a subsidiary in 2009, such as in digital cameras, washing machines and rice cookers. Because of this, home appliance production at the three firms will be merged into one "consumer product production segment."

Such moves will strengthen overseas operations through the synergistic effects of consolidation, a company official said. ===

Unification of brands

Panasonic has set a goal of 10 trillion yen in global sales and a 5 percent profit ratio in fiscal 2012. To fulfill the target, one major task is to boost the firm's brand image in emerging economies, the official said.

In 2008, the company named after founder Konosuke Matsushita, Matsushita Electric Industrial Co., announced its name would be changed to Panasonic Corp. (NYSE:PC) and its National brand name would be replaced with Panasonic to enhance its value. However, according to a 2009 survey by the U.S. branding consultant firm, Interbrand, Panasonic ranked 75th in a list of the world's top 100 brands, lagging far behind Samsung at 19th and Sony Corp. (NYSE:SNE) at 29th.

Another major goal of the reorganization at Panasonic is to improve its environmentally friendly and energy-efficient sectors by taking advantage of Sanyo's strength in solar power cells and other batteries, and Panasonic Electric Works' clout in lighting and home equipment.

"The success or failure of our growth strategy hinges on whether we can provide consumers with a wide-ranging, integrated product line," Otsubo said, pointing out that products from the three firms will be marketed under the Panasonic brand. ===

Different corporate cultures

The reorganization of the three firms into three major segments, however, is not without hurdles, as the corporate cultures of Panasonic and Sanyo are said to be quite different. Panasonic Electric Works has a "dominant, independent spirit," according to a Panasonic executive, noting the company has been producing wiring instruments since the founding of Matsushita Electric.

Under the circumstances, there is no way to know if the integration will go smoothly. However, even if all goes as planned, the reorganization will take 18 months. This has been criticized as too slow by some market analysts, especially considering the speed at which Panasonic's South Korean rivals are expanding.

If Sanyo and Panasonic Electric Works put up any resistance to the unification plan, a delay in the reorganization could easily occur, the analysts said.



Symbol :


Market news:

More news


    Recent Estimates

AnalystFirm NameSymbolEPS Estimate
robertbig j JPM$0.71