Posted by: Kenji Hall on May 12, 2008
More merger news from Japan. This time, it’s two mid-sized consumer electronics companies, Kenwood and Victor of Japan (maker of the JVC brand), that are joining forces to improve their chances of survival. The two said today they have agreed to form a holding company in October. The deal follows Kenwood and asset manager Sparx Group’s combined $340-million purchase of a 30% stake in JVC, which is still majority owned by from Matsushita Electric Industrial. Presumably, this merger ensures that JVC won’t disappear and gives Matsushita the opportunity to exit without leaving JVC to flounder on its own.
Both Kenwood and JVC are respected brands in the consumer electronics, but they will probably have a better shot at staying relevant together—that is, if they actually find some way to merge their operations. The trouble with mergers in Japan is that companies rarely do more than become a messy, giant, unwieldy version of their original selves, and often have trouble bridging the divide between their corporate cultures.
In a statement, the duo said they expect sales of $8 billion and operating profit of $375 million by the fiscal year ending March 2011. That’s miniscule. Take the biggest of Japan’s electronics heavyweights, Matsushita: Two weeks ago, Matsushita reported sales of $87 billion and operating profit of $5 billion. So, no, Kenwood and JVC will not be in the same league as Japan’s major electronics brands. I’m guessing that they will try to focus on high-end, value-added products that might appeal to video- and audiophiles who want their home and car electronics to have all the bells and whistles that you might not get with the more mainstream brands. More on this and the companies’ strategy after the two sides brief the press tonight.