TOKYO - JAPAN'S Panasonic Corp said on Friday it had cleared the way to acquire struggling Sanyo Electric Co for up to US$9 billion (S$13 billion), forming an industry heavyweight amid the global downturn.

The deal is the first major realignment of Japan's electronics industry since the start of the economic crisis, which has led companies to suspend production as consumer demand dries up.

Panasonic said it would launch a tender offer aiming to secure a 70.5 per cent stake in Sanyo, which has been slashing thousands of jobs as it tries to return to profit.

Panasonic said it had reached a deal to buy each share for 131 yen, valuing the deal at a maximum of 800 billion yen (around S$13 billion) overall, after investment group Goldman Sachs and others agreed to sell their holdings.

In a joint statement, Panasonic and Sanyo said that the companies had to take 'drastic action' to spur revenue and growth in the midst of the financial crisis and intensifying global competition.

'Panasonic and Sanyo believe that together they will evolve into a corporate group which will be highly admired globally' including by 'coexisting in harmony with the global environment,' they said.

Sanyo, which started off making bicycle lamps after World War II, has recently tried to focus on environmental technologies including solar energy and rechargeable batteries.

With the acquisition, the companies hope to team up to expand in the solar business 'in which significant future growth is expected,' they said.

Sanyo, which like Panasonic is based in the western Japanese metropolis of Osaka, will remain listed, the statement said.

Sanyo has had a troubled few years, issuing new shares bought by Goldman Sachs and other financial firms in a bid to raise money.

Toshimasa Iue, a member of the founding family, stepped down last year after he clashed with the big investors over how far to restructure the company. -- AFP