Japan Fund Said to Discuss Sony-Panasonic Battery Merger

A Japanese state-backed fund approached companies including Sony (6758) Corp. and Panasonic Corp. (6752) about combining operations making rechargeable batteries, according to a person familiar with the matter.

Innovation Network Corp. of Japan has also held talks with an NEC Corp (6701).-Nissan Motor Co. (7201) battery venture, said the person, who declined to be identified because the matter is private. The discussions are at an early stage, the person said. Panasonic and Sony are Japan’s biggest makers of lithium-ion batteries.

Sony jumped to about a nine-month high in Tokyo trading after the Yomiuri newspaper reported today that INCJ may invest in a combination between Sony’s battery unit and the NEC-Nissan venture. INCJ last year led a consolidation of Japanese liquid- crystal-display makers struggling against competitors from China and South Korea.

Spokespeople for Sony, Nissan, NEC, Panasonic and INCJ declined to comment when contacted by Bloomberg News.

The state-backed fund can offer the money needed to expand businesses with manufacturers of electric cars, said Renzo Yamamoto, the chief analyst at Techno Systems Research Co. in Tokyo.

“The industry has the potential for significant expansion, and that means battery makers will need money to build facilities and to develop new products,” Yamamoto said.

Nissan Leaf

The consolidation proposal isn’t related to the current investigation of batteries supplied by Kyoto-based GS Yuasa Corp. (6674) that led to the grounding of Boeing Co.’s 787 Dreamliner fleet, the person said.

Yomiuri reported that the deal between Sony and the NEC- Nissan venture, known as Automotive Energy Supply, may take place in the year starting April 1. The newspaper cited people it didn’t identify.

Automotive Energy Supply, 51 percent owned by Nissan, makes battery packs for Leaf electric cars. The venture has a plant in Zama, where the company is based.

Panasonic took 95.6 billion yen ($1.06 billion) in charges during the fiscal first half ended Sept. 30 to reform its unit making lithium-ion batteries used in consumer electronics goods. President Kazuhiro Tsuga said in October the Osaka-based company may pull out of businesses with operating margins of less than 5 percent by March 2016.

Seeking Alliances

Sony Chief Executive Officer Kazuo Hirai said in April he would consider alliances for its battery unit as part of his plan to revive the maker of Bravia TVs following four straight annual losses. The company was in talks to find customers for car batteries, it said in 2009.

INCJ took a 70 percent stake in a display venture that initially included the LCD operations at Sony, Toshiba Corp. (6502) and Hitachi Ltd. (6501)

The fund, started in 2009 to spur growth by promoting consolidation and nurturing new businesses, has the capacity to invest 2 trillion yen, according to its website. Its shareholders include 27 corporations such as Sony, Panasonic and Toyota Motor Corp. (7203)

Last month, Renesas Electronics Corp., the ailing Japanese chipmaker, agreed to sell new shares to a group led by INCJ to raise at least 150 billion yen.

The fund’s past deals include a $680 million investment for a 40 percent stake in Landis+Gyr AG, a Swiss electronic-meter company majority-owned by Toshiba, and a minority investment in Kureha Battery Materials Japan Co., a closely held company that makes anode material for lithium-ion batteries.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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