Kyocera to Acquire Mobile Phone Business of SANYO Electric

(Business News & Technology News, 23 Jan 2008)

Kyocera Corp. has reached a definitive agreement with SANYO Electric Co. Ltd to acquire SANYO's mobile phone business. The agreement has already been approved by both companies' boards of directors and is planned to become effective April 1, 2008.

Kyocera's goal for the acquisition is to strengthen its global telecommunications equipment business. Under the agreement, Kyocera acquires a comprehensive set of assets from SANYO relating to the research, development, design, materials procurement, manufacture, sales and marketing of CDMA handsets; PHS handsets; PHS base stations; and wireless communications systems; as well as a range of related technologies, intellectual property and patents. The acquisition is forecast to grow worldwide annual revenues from Kyocera's global telecommunications equipment business to about 400 billion Japanese yen (about $3.7 billion).

"This transaction will yield great synergies and economies of scale in areas such as technology portfolios, R&D, procurement, design, marketing and sales," said Makoto Kawamura, President of Kyocera Corp., the group's global parent. "Furthermore, the Kyocera and SANYO product portfolios are highly complementary, and will allow us to offer a broader lineup of handsets and data devices to all of our carrier customers."

To ensure a smooth transition in the market, Kyocera plans to offer both Kyocera- and SANYO-branded products in Japan and abroad for the foreseeable future. Kyocera also plans to offer continued employment to all affected SANYO employees, totaling approximately 2,000 workers.

Kyocera will pay cash for the unit. The acquisition price will be determined through finalizing processes after April 1, 2008, based on the unit's total business value of 50 billion Japanese yen ($467 million) as agreed upon by Kyocera and SANYO, before subtracting the unit's notional business cash equivalent on hand and adding/deducting interest-bearing transfer debt and transfer cash equivalents as of April 1, 2008, as well as adjustment items agreed to separately, which could result in a final acquisition price of about 40 billion Japanese yen ($375 million).

In North America, the acquisition will result in the creation of a new wholly-owned Kyocera subsidiary on April 1, 2008 that will assume the operations of the U.S.-based SANYO business units and will commence operations separate from San Diego-based Kyocera Wireless Corp., in order to maintain immediate continuity with its existing distribution network.

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