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Kyocera announces deal for Sanyo's cellphone division

The company hopes to boost its struggling operations in the U.S. through the purchase.

January 22, 2008|From Times Wire Services

Japanese electronics maker Kyocera Corp. said it would buy Sanyo Electric Co.'s money-losing cellphone business for as much as $468 million, creating the world's sixth-largest cellphone maker.

Kyocera, whose international unit is based in San Diego, hopes the deal will boost its struggling U.S. operations as Sanyo has with Sprint Nextel Corp. as a major customer in that market, although Sanyo aims to focus on its core products such as rechargeable batteries.

"We need to strengthen our overseas operations, but our own resources are limited," Kyocera President Makoto Kawamura said. "We cannot expect rapid growth in the domestic market with so many cellphone makers and so much competition."

But industry specialists say the move, disclosed in October but without a price tag, is unlikely to give Kyocera the kind of business scale it needs to compete squarely with global giants such as Nokia and Samsung Electronics Co.

The combined Kyocera- Sanyo cellphone business would have a worldwide market share of 1.5%, far behind LG Electronics Inc., the fifth-largest operation with 7.1%.

"The move is somewhat negative for Kyocera. Even if you combine the two cellphone operations, the global market share remains small," said Akihiko Uchino, senior analyst at Mitsubishi UFJ Securities.

"Its mobile phone business may temporarily get strengthened, but it seems unlikely that it will win in the long run."

Kyocera and Sanyo expect the deal, which includes about $93 million in debt, to be completed April 1.

Under Monday's agreement, about 2,000 employees in Sanyo's mobile-phone operation will be transferred to Kyocera, which will continue to use the Sanyo brand on handsets at home and overseas.

For Sanyo, the move is the latest step to shed non-core businesses in a move to concentrate on its key operations including rechargeable batteries and solar cells.

Sanyo, restructuring with the help of shareholder Goldman Sachs, is the world's largest rechargeable-battery maker. Its lithium-ion batteries are used in four of every 10 mobile phones in the world.

Clinching the deal with Kyocera is a clear step forward in Sanyo's turnaround efforts after the company saw its plan to form a joint venture with Nokia fall through in 2006 and after it sold its microchip unit last year.

Sanyo's former president was ousted last year after he refused to make major reforms. Sanyo has already sold its small mobile-phone retail business.

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