Panasonic Corp. is in talks over potentially its biggest acquisitions in the U.S. and Europe in a decade, hoping to speed its transition from manufacturing televisions to supplying solar energy and power storage services.
“Acquisitions are in our sight as we need to seek a different business model in the U.S. and Europe,” Shusaku Nagae, who heads Panasonic’s Eco Solutions Co. unit, said Thursday in Tokyo.
The deals under consideration may be worth more than ¥10 billion he said, declining to elaborate.
Panasonic, heading for a record ¥800 billion loss this fiscal year amid plunging TV prices, plans to expand its business by selling bundled solar and power management services to businesses in the U.S. and Europe, Nagae said.
Panasonic’s last acquisition worth more than ¥10 billion in the U.S. or Europe took place in 2002, when its Panasonic Electric Works Co. unit paid €172 million (¥18.5 billion) for Germany’s Vossloh Elektro GmbH. Only three deals in the group’s history have topped the ¥10 billion mark, according to data compiled by Bloomberg.
“We plan to start something we have never done before,” Nagae said. “In those countries, we can’t replicate the rooftop solar business we do in Japan.”
Panasonic, Japan’s third-largest solar panel maker after Sharp Corp. and Kyocera Corp., generates more than half its revenue in the domestic market. It also builds and sells homes in Japan with built-in solar panels and systems to feed the power they generate into appliances and storage batteries.
The possible acquisitions are aimed at allowing the company to adapt this model to commercial properties in Europe and the U.S., including shopping centers or supermarkets, Nagae said. Germany, the world’s biggest solar power market, Italy and Spain are among the countries seeing high demand for energy-saving products, he said.
Rival Sharp, the country’s leading solar panel maker, agreed in 2010 to buy California’s Recurrent Energy for $305 million (¥24.5 billion) to expand into building power plants amid rising competition from Chinese manufacturers.
Owning the West Coast solar power developer helps Osaka-based Sharp move further into the U.S. market for installing photovoltaic panels and building power plants to sell emissions-free electricity to utilities and commercial users.
The scale of Panasonic’s potential acquisitions won’t strain Panasonic’s cash flow and credit standing, Nagae said, declining to elaborate further on funding plans.
Cash, near cash and short-term investments fell to about ¥712 billion as of Dec. 31, down from ¥1.21 trillion a year earlier, according to Bloomberg data. The figure stood at ¥1.58 trillion at the end of 2006.
Standard & Poor’s on Wednesday lowered Panasonic’s credit-rating one level to A-, the fourth-lowest investment grade, citing the “commoditization of key products and the strong yen.”
Panasonic is targeting ¥1 trillion in annual revenue by 2018 for its business that integrates solar panels, battery systems, power-controlling units, LED lamps and other appliances that reduce power consumption.
That compares with a projection of ¥105 billion for the business year to March 2013 and ¥300 billion in 2016, Nagae said. Panasonic’s total sales will come to around ¥8 trillion in the next fiscal year from April 1, according to the average of 20 analyst estimates compiled by Bloomberg.
Buildings may be sold
Panasonic Corp. plans to sell three Tokyo office buildings that house part of its headquarters to improve business efficiency in the face of massive losses, company sources said Friday.
The major electronics company, which is based in Kadoma, Osaka Prefecture, will decide later how to sell Tokyo Panasonic Buildings No.1 to No. 3 in Minato Ward, the sources said.
Panasonic will transfer some of its operations, including public relations and a marketing division for electronics appliances, to another building in Minato Ward that was Panasonic Electric Works Co.’s Tokyo head office before the two merged last month, the sources said.
The company announced earlier this month it expects to book a massive group net loss of ¥780 billion for this business year ending March 31.