Struggling consumer electronics maker JVC will likely merge with audio equipment maker Kenwood Corp under a joint holding company as early as 2008, sources close to the matter said on Saturday.
Matsushita, the world's largest consumer electronics maker holding 52.4 percent stake in JVC, is expected to sell its shares in the Yokohama-based firm to the holding company, taking the losing-making JVC off its consolidated accounts, they said.
Panasonic maker Matsushita Electric Industrial Co has been trying to sell its JVC stake, worth about 52.6 billion yen ($425 million), because its persistent losses have been weighing on its group-based earnings performance.
Under the preliminary integration plan, Kenwood will first buy 20 billion yen worth of new JVC shares through a third-party allocation, taking a stake of about 13 percent. Then, JVC and Kenwood, a maker of audio equipment and car electronics, will set up a holding company as early as 2008, under which two firms will merge their operations. They aim to reach the final agreement by the end of July, the sources said.