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Capital and Business Alliance with SANYO (Dec 19, 2008) Q&A Summary

Q Please tell us how the discussions started between the two companies. Why did SANYO Electric Co., Ltd. (SANYO) choose Panasonic Corporation?
A SANYO had initially planned to look at its capital policies after completing its current mid-term management plan, ending March 31, 2011 (fiscal 2011). However, recent financial circumstances have forced us to look at this much sooner than planned.
Under these conditions, Panasonic's President Fumio Ohtsubo made a proposal to SANYO that we work together on maximizing synergies to prevail in the face of global competition. We had frank discussions on a number of occasions. We have overlapping businesses, but the potential synergies are far greater. Therefore, SANYO made a judgment that it is vital for us to form a capital and business alliance with Panasonic. (Seiichiro Sano, President, SANYO)
Q Please tell us how you decided on a tender offer purchase price (131 yen per share).
A We carried out detailed due diligence of businesses with the cooperation of major shareholders and SANYO. The purchase price was calculated based on the value put on SANYO alone and the synergies which the two companies would be expected to generate. (Fumio Ohtsubo, President, Panasonic)
Q Please explain in a little more detail about the expected synergies of 80.0 billion yen.
A We are assuming synergies of 80.0 billion yen on an operating profit basis in fiscal 2013 ending March 31, 2013. Of those synergies, 40.0 billion yen are expected from energy-related businesses. The other half will come mainly from the medical field, a strengthened business structure, logistics and economies of scale in procurement.
We expect some dissynergies as well, but these are of course reflected in the tender offer purchase price. An important focus will be on proactively identifying areas we can turn into synergies. (Fumio Ohtsubo, President, Panasonic)
Q When does Panasonic expect to recoup its investment?
A In general, investments should be recouped over five to seven years. We will need to pay at least around 400.0 billion yen to obtain a majority stake in SANYO, while we are assuming synergies of 80.0 billion yen on an operating profit basis in fiscal 2013. Based on these two figures, the payout time can be calculated as 5 years (400÷800). (Fumio Ohtsubo, President, Panasonic)
Q You have announced the issuance of straight bonds of up to 400.0 billion yen. Why have you chosen to issue straight bonds rather than borrow funds?
A We plan to finance this tender offer bid with cash reserves, firstly. We have decided to issue straight bonds to enrich our cash reserves further in preparation for capital expenditures and various other demands for funds going forward. The environment for issuing straight bonds is difficult, but after talking it over with our main securities companies, we believe that we should be able to raise the funds. (Hideaki Kawai, Executive Officer, Panasonic)
Q You have announced a possible investment of around 100.0 billion yen. Will this money be invested in energy-related areas?
A The 100.0 billion yen is a forward-looking investment for generating synergies. Battery business is one of the main target fields, but we also plan to invest in necessary areas with speed and at the right time, including medical- and air conditioning-related areas. (Fumio Ohtsubo, President, Panasonic)
Q What discussions have the two companies had about employment at SANYO?
A SANYO is, indeed, going to undertake structural reforms in its businesses, including the semiconductor business, which is facing extremely difficult conditions. We will give full consideration to employment, but we are also conscious of the fact that employment depends on having viable businesses. I have had no discussions with President Ohtsubo in particular about what we must do. (Seiichiro Sano, President, SANYO)
Disclaimer Regarding Forward-Looking Statements
  This Q&A includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this Q&A do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this Q&A. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.
  The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Panasonic Group are denominated; the ability of the Panasonic Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the possibility of not achieving expected results on the alliances or mergers and acquisitions; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Panasonic Group to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects in products or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and good will, and deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes and other events that may negatively impact business activities of the Panasonic Group. The factors listed above are not all-inclusive and further information is contained in Panasonic latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission.

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