JVC, Kenwood a Step Closer to Merging

Two prominent Japanese consumer electronics companies formally have agreed to merge, establishing a joint holding company through a share transfer on Oct. 1.

Victor Company of Japan—known to most folks as JVC—and Kenwood plan shareholder meetings in late June. Shareholders will need to approve the deal. Radio World reported last summer a deal was in the works.

The companies believe that together they can better compete against new rivals from South Korea, Taiwan and China, and deal with “increasingly fierce battles over market share and heightened price competition” in the global market.

Management plans to establish four business segments as profit centers accounting for 90 percent of the merged company’s sales by fiscal year 2011. The segments are home and mobile electronics, car electronics, professional systems and entertainment.

The companies estimate the holding company would have $830 million in net sales and an operating profit ratio of 4.7 percent for fiscal 2011. This assumes a conversion rate of 100 yen to the U.S. dollar.

If approved by shareholders, the deal would go through in October and “JVC Kenwood Holdings” would be established. Among those already approving the transfer is JVC’s largest shareholder, Matsushita Electric Industrial Co.

(Radio World)