SANYO Announces Definitive Agreement to Transfer Mobile Phone Business to Kyocera
SANYO Electric Co., Ltd. (SANYO) announces today that it has reached a definitive agreement with Kyocera Corporation (Kyocera) to transfer its mobile phone business, following the announcement on October 11, 2007 of a basic agreement to begin transfer negotiations.
The definitive agreement reached today outlines the process of transferring SANYOs mobile phone business operations* to Kyocera. The business and its assets-included value have been agreed upon by both SANYO and Kyocera at 50 billion yen. However, regarding the transfer amount, it will be calculated by subtracting the amount of outstanding debts accruing interest and adding the amount of cash and deposits to be transferred on the effective date. Therefore, the total value of the transferred business will be approximately 40 billion yen after these deductions are made. The final amount will be announced once it has been fixed and negotiations are concluded. The business is tentatively set to be transferred to Kyocera on April 1, 2008 through an absorption-type demerger.
*The entire CDMA handsets business (excluding Tottori SANYO) as well as the PHS handset, base station business and other operations related to the wireless communications system business.
Ever since SANYO entered the mobile phone manufacturing business in 1994, SANYO has developed and grown the business into one of its key businesses, and supplies several key telecommunications carriers both domestically and overseas with handsets primarily using CDMA technology. Since that time, however, the business operating environment surrounding the mobile phone business has changed, receiving intensified competition from rival companies. In order to meet the best interests of the business and its stakeholders, SANYO has explored all options regarding the further expansion and development of the business, and has concluded that a transfer of the business to Kyocera would be the ideal solution for both business value and ease-of-succession.
Through this merger, the business will be able to establish an overwhelming position, making it the top vendor in the domestic CDMA handset market. Furthermore, it will establish a stronger business foundation based on the CDMA telecommunications carriers SANYO already works with in North America, preparing the structure needed to raise the businessf status as a global handset maker. Already the business is seeing the results of the synergy created by the alignment of the two businesses from development collaboration in the areas of cost reductions and the reduction of other common expenses in distribution, etc.
Mr. Kentaro Yamagishi, an Executive Director and Executive Vice President of SANYO, commented on todays agreement, saying, Kyocera has said that in addition to highly valuing SANYOs excellent human resources, they also highly value SANYOs North America client base and SANYOs technological development capability. As for the merging of these two businesses, I firmly believe that it will offer a wider spread of both facilities and opportunities to employees. Adding further, he commented, adding, SANYO will continue to focus its investments as part of its overall group business strategy, and will bring to fruition the challenge, Challenge 1000, issued in the new Mid-term Business Strategy, or Master Plan, and accomplish an operating profit of 100 billion yen in about 1000 days (approximately three years) by the end of fiscal year 2010.
The agreement announced today also outlines that the current 2,000 employees in SANYOs mobile phone business (excluding contract workers and temp agency staff) will be allowed to remain and work for Kyocera following the transfer. Regarding the branding on the handsets, Kyocera will continue to use the SANYO brand on handsets both domestically and overseas. It will also continue its own brand, and the phone business will be developed using both the Kyocera and SANYO brands.
Also, regarding the business operations and plans for the North American market, following a smooth transition and start following the merger, the current distribution channels will continue to be supported and utilized. Finally, a new company in addition to Kyocerafs current subsidiary doing business in North America, the Kyocera Wireless Corporation, is planned to be established.
SANYO Electric Co., Ltd. is a leading solutions provider for the environment, energy and lifestyle, based on its Brand Vision Think GAIA. SANYOs businesses cover a broad range of products and services such as rechargeable batteries, photovoltaic systems, HVAC/R equipment, digital imaging devices, telecommunications equipment, home appliances, electronic components and others. For further information, please visit SANYOs web site at http://www.sanyo.com/.
Kyocera Corporation (NYSE: KYO / http://global.kyocera.com/), the parent and global headquarters of the Kyocera Group, was founded in 1959 as a producer of advanced ceramics. By combining these engineered materials with metals and plastics, and integrating them with other technologies, Kyocera has become a leading supplier of telecommunications equipment, semiconductor packages, electronic components, laser printers, copiers, solar energy systems and industrial ceramics. During the year ended March 31, 2007, Kyocera Corporations consolidated net sales totaled approximately US$10.8 billion (JP\1,283,897 million) with net income of approximately US$895 million (JP\106,504 million).
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