Panasonic Plans Record Bond Sale for Sanyo Takeover

Panasonic Corp. may sell a record 400 billion yen ($4.1 billion) in bonds as soon as tomorrow to finance its proposed purchase of Sanyo Electric Co., three people familiar with the matter said.

Osaka-based Panasonic, the biggest consumer-electronics maker, plans to split the sale into 200 billion yen of five-year notes, 100 billion yen of three-year bonds and 100 billion yen of 10-year securities, said the people, who declined to be identified pending a formal announcement.

“Even if finances deteriorate due to the Sanyo acquisition, Panasonic will still be better than other electronics makers,” Fumihito Gotoh, Tokyo-based head of Japanese credit research for UBS AG, said in a phone interview today. “In addition to being top in the electronics sector, Panasonic is stable in terms of finances.”

Panasonic on Dec. 19 said it will pay as much as 806.7 billion yen to buy Osaka-based Sanyo in Japan’s biggest consumer-electronics acquisition. The purchase would give Panasonic access to Sanyo’s solar-cell technology and make it the world’s No. 1 maker of rechargeable batteries used in mobile phones and laptops.

Panasonic gained Sanyo’s endorsement on Nov. 7 to take over the company. Goldman Sachs Group Inc., Daiwa Securities Group Inc. and Sumitomo Mitsui Financial Group Inc., Sanyo’s three biggest shareholders, bailed out the company for 300 billion yen in 2006 and agreed to hold their shares until March 2009.

The takeover requires antitrust clearance in 11 countries, including Japan and China, Panasonic said on Feb. 27.

Acquisition Finance

“We’ll use funds procured from a bond sale for M&A and for working capital,” Panasonic spokesman Makoto Mihara said in a phone interview today, declining to comment on the sale’s timing or size.

A 400 billion yen sale would be the biggest by a Japanese manufacturer, eclipsing the previous record set in January 2002 when Panasonic, known then as Matsushita Electric Industrial Co., sold 300 billion yen of notes, according to data compiled by Bloomberg.

Panasonic hired Nomura Securities Co., Goldman Sachs, Daiwa Securities, Nikko Citigroup Ltd. and Mizuho Securities Co. to manage its bond sale, a banker involved in the transaction said Feb. 6.

Panasonic has 160 billion yen in bonds maturing through 2015, Bloomberg data show. The company’s debt is rated Aa2 by Moody’s Investors Service, the third-highest investment grade, and one notch lower at AA- by Standard & Poor’s.