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Sanyo dives on report of Panasonic discount offer

Shares of Sanyo Electric fell about 8% after a newspaper reported that Panasonic Corp was seeking to buy Sanyo shares at ¥120 each, far below the current stock price.

Panasonic had said earlier this month that it planned to acquire smaller rival Sanyo in a deal that would create Japan's top electronics maker. But Panasonic and Sanyo's main shareholders have yet to agree on a price.

Sanyo stock fell 8.1% to ¥147, underperforming a 4% rise in the benchmark Nikkei average.

Trading had been suspended earlier on Tuesday after the Yomiuri Shimbun reported that Panasonic has begun talks with Goldman Sachs and other Sanyo shareholders to buy the shares at that price.

Panasonic, Japan's largest electronics company, and the Japan unit of Goldman Sachs both declined to comment on the report.

To acquire Sanyo, Panasonic has to buy out its top three shareholders, Daiwa Securities SMBC, Sumitomo Mitsui Banking Co and Goldman Sachs, which bailed out the company in 2006.

The three hold nearly 430 million preferred shares, each of which can be exchanged for 10 common shares when a restriction is lifted in March. If converted they would hold a combined 70% stake.

Panasonic is proposing the tender offer price below the recent market prices of Sanyo shares, because of an expected dilution in the per-share value of the stock after the conversion of the outstanding preferred shares, the Yomiuri said.

The paper said an agreement on the deal, which would cost Panasonic ¥300 billion to ¥500 billion ($3.08 billion to $5.14 billion) in total, may not be reached quickly because Goldman aims to sell its stake for about ¥250 per share. (Reuters)