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Texas Pacific, Cerberus Submit Bids for JVC

Reuters
WATCH LIVE

Texas Pacific Group and Cerberus have submitted bids for control of struggling consumer electronics firm JVC, sources familiar with the matter said on Monday.

Panasonic maker Matsushita Electric Industrial is selling its 52.4% stake in Victor Co. of Japan (JVC) because JVC has been losing money, dragging down Matsushita's group profits.

"At this stage TPG and Cerberus are likely to have submitted low-ball bids to get access to more information on JVC in order to value it properly," one of the sources said. "There is a disconnect at this stage between Matsushita's price expectations and the funds'. Some of JVC's businesses are doing well, while others are doing not so well," he added.

Matsushita's stake is worth about 81 billion yen ($680 million) based on Friday's closing price.

European buyout firm Permira, Asian private equity fund CCMP Capital Asia and Japanese audio equipment maker Kenwood did not progress to the next round of the auction, the sources said.

The next stage in the process will be the selection of a preferred bidder by Matsushita, the sources said.

The funds are carefully assessing the company, a difficult job because of its international businesses. It is also seen as risky because the firm is small in a cut-throat global business.

Although the Yokohama-based company enjoys brisk demand for hard-disk-drive-equipped camcorders, its rear-projection television sales have been hit by sharp falls in plasma TV prices.

It is also struggling to compete with industry titans such as Sony and Samsung Electronics in the liquid crystal display TV market.

JVC said on Feb. 19 it would have a recurring loss of 7 billion yen ($60 million) for the year to March instead of its previously forecast 4 billion yen profit.

The new outlook, which compares with a consensus estimate by analysts of a recurring loss of 4.6 billion yen, should make it easier for bankers to put together financial packages for the acquisition of JVC by private equity firms.

The company, a pioneer of VHS-format videocassette recorders, has also been hurt by a shortage of hit labels at music unit Victor Entertainment, whose artists include Japanese pop group SMAP.