Matsushita negotiating to sell JVC to Kenwood

Matsushita Electric Industrial Co. has decided to sell its stake in Victor Co. of Japan and is negotiating with prospective buyer Kenwood Corp., sources said Saturday.

Matsushita, which has a 52.4 percent stake in JVC, plans to complete its latest round of structural reforms by removing JVC from group earnings, the sources said.

JVC President Masahiko Terada is believed to have met with Kenwood President Haruo Kawahara earlier this month.

The sources said there is another proposal on the table which calls for JVC executives to acquire the shares from Matsushita through a management buyout, the sources said.

Cerberus Group is negotiating with JVC executives to provide the necessary capital for such a deal, they added.

JVC, the pioneer of VHS-format VCRs, was once a strong player in consumer electronics. However, its earnings have tapered off due to mounting competition.

It suffered a 30.6 billion yen group net loss on 806.8 billion yen in sales for the business year that ended last March 31.

By acquiring JVC, Kenwood would seek to use the Victor brand to strengthen its own video and audio lineup, the sources said.

"Our policy to closely watch the operation of Victor, which is making its utmost effort for a business recovery, has not changed," a Matsushita spokesperson said. "Nothing is decided about the sale."

Matsushita spokesman Akira Kadota however acknowledged that JVC is the only Matsushita subsidiary which is in the red. "There are many options, and a sellout is one of them," he said.

Established in 1927, JVC joined the Matsushita group in 1954 and produced such hit items as color television sets and VCRs. It had about 28,500 employees as of Sept. 30.