SANYO Electric Co., Ltd. (SANYO) announces that it has reached a basic agreement to continue further negotiations with Kyocera Corporation (Kyocera) regarding the transfer of SANYO's mobile phone business, upon resolutions settled in each company's respective Boards of Directors meetings held today. In accordance with the agreement reached in today's meetings, SANYO has granted Kyocera priority negotiating rights, and both companies have signed a contract signifying this basic agreement. Details of the agreement are as follows.
1. Objective of the Basic Agreement
SANYO, along with the current Mid-term Management Plan (FY2005 - FY2007) announced on November 18, 2005, placed its mobile phone business as a core business. Since that time, the Company has made efforts to implement measures to strengthen the business through reforms to cost structure, such as lowering production costs by moving operations overseas, as well as intensifying competitiveness. However, following the decision to set this as a core business, there has been a rapid change in the business environment, and a fundamental review was undertaken as to how the business fits in with the Company's entire business portfolio. As a result of this review, SANYO reached a decision that optimization of this business can be achieved not by continuing to develop it as a non-consolidated entity, but by taking necessary steps to strengthen the management base by transferring the business to another company. Under these circumstances, SANYO has granted Kyocera priority negotiating rights, and signed a basic contract with Kyocera agreeing to continued negotiations.
Hereafter, regarding the transfer of the mobile phone business, both companies will have the value of the assets appraised and audited, and will continue to work together negotiating a possible final agreement.
2. Targeted Business Contents
1) Overview: Mobile Phone Business (Excluding Tottori SANYO Electric Co., Ltd. and Telecom SANYO Co., Ltd.), PHS handsets, PHS base station and radio system business (to become WiMAX base station business)
2) Consolidated Sales: Approx 277 billion yen (as of March 31, 2007)
3. Outline of Kyocera Corporation
Company name - Kyocera Corporation
Head Office - Kyoto, Japan
Representative - President Makoto Kawamura
Established - April 1959
Capital - 115,703 million yen (as of March 31, 2007)
Accounting Period - March
Group employees - 20,000 units
Business Contents - Fine ceramic components, electronic devices, various equipment, other various businesses
Consolidated net sales - 1,283,897 million yen (Consolidated/as of March 31, 2007)
4. Effect on Financial Results
Upon reaching a final agreement and amount regarding the transfer of the business, any effect on financial results will be disclosed.
*Please note that there is the possibility that SANYO may decide to explore the option of establishing the mobile phone business as a new independent company. Details on the scheme as regards the transfer of shares, including those of this newly-established company, will be settled upon a forthcoming decision by both companies.