Panasonic Holdings to sell part of its auto business to Apollo Global funds  

Staff Reporter 

Sat November 25 

Panasonic Holdings, a prominent Japanese electronics conglomerate, has disclosed its intention to divest a portion of its ownership in its automotive systems division to investment funds overseen by American corporations.   The agreement, anticipated to be concluded by March 31, 2024, will establish the automotive business as an equity-method affiliate of Panasonic. The majority ownership will be held by funds controlled by Apollo Global Management, a private equity firm.

Panasonic Automotive Systems Corp., known as the automotive systems business, offers a diverse range of components and solutions for vehicles, including infotainment systems, batteries, sensors, and cameras.   In the fiscal year ending in March 2023, the business contributed around 15% to Panasonic’s sales, generating revenue of ¥1.28 trillion ($8.5 billion).

As part of its strategic plan, Panasonic aims to concentrate on its primary industries and allocate resources towards emerging sectors, including hydrogen energy, biotechnology, and space research.   The business, which provides batteries to Tesla, has encountered escalating competition and diminishing profit margins in the car industry.   In April 2022, the corporation underwent a restructuring process and transformed into a holding company, thereby facilitating the possibility of separating or selling its many operations.

The agreement is anticipated to have a positive impact on the automotive industry, since it will provide the automotive firm with access to Apollo’s specialized knowledge and resources, as well as the potential to pursue an initial public offering at a later date.   Apollo, with $472 billion in assets under management, has a history of investing in the automobile industry, exemplified by its purchase of Rackspace Technology, a cloud services company, in 2016.

The agreement is contingent upon obtaining regulatory approvals and fulfilling other usual closing conditions.   The financial terms of the arrangement and the specific share to be sold have not been revealed by Panasonic and Apollo.   Panasonic has stated that it will disclose the effect of the agreement on its financial outcomes once the particulars are settled.   

The agreement represents a noteworthy achievement for both Panasonic and Apollo, as they want to take advantage of the prospects and difficulties brought about by the digital transformation, the evolving geopolitical environment, and the recovery following the pandemic.   The agreement also signifies Panasonic’s aspiration to rival other prominent technology conglomerates, including Google, X, and Meta, who are similarly making substantial investments in artificial intelligence and data aggregation.   Panasonic aims to distinguish itself through the provision of highly dependable and environmentally-friendly products and services, while also prioritizing user and host privacy and control.

The agreement has sparked significant interest and enthusiasm within the technology and automotive sectors, since there is great curiosity over the integration of Panasonic’s automotive company into Apollo’s portfolio and the potential synergies and innovations that may result.   There is speculation that Panasonic could utilize the transaction as an opportunity to enhance its footprint and influence in other countries, including the United States and Europe.  

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