BEIJING - Hunan Corun New Energy Co Ltd said on Wednesday that it has agreed to purchase a division of Panasonic Corp that produces automotive nickel-hydride batteries for 502.4 million yen, or 40 million yuan ($6 million).
The Hunan-based battery maker will buy the related nickel-metal-hydride battery assets in Panasonic's Shonan plant based in the city of Chigasaki in Kanagawa Prefecture in Japan, according to Corun's statement to the Shanghai Stock Exchange on Wednesday.
The deal is expected to be completed by the end of April.
Hunan Corun's A shares surged by 4.69 percent, or 1.09 yuan, to close at 24.35 yuan on Wednesday, as China's major gauge (the Shanghai Composite Index) slid 0.89 percent on the same day.
The takeover "will push Corun to realize its development strategy as early as possible and help it rapidly tap into the international market as Shonan has a long-term cooperative relationship with large global automakers," Corun said in the statement.
The transaction will also improve Corun's capabilities in production and research and development in the area, the company said.
The Shonan plant, which is a division of Panasonic's Energy Company, an internal subsidiary, started manufacturing the nickel-hydride batteries for vehicles in 1997 and its products supply some of the world's largest automakers, including Honda Motor Co and Toyota Motor Corp.
The transaction came after a ruling by the Chinese Ministry of Commerce in October 2009 which - in accordance with international practice - called on Panasonic to sell its automotive nickel-hybrid battery business in Shonan to a third party as a condition of approval of its acquisition of its rival Sanyo Electric in an aim to avoid a monopoly after the takeover.
The ministry said earlier that Panasonic would hold a 77 percent share in China's nickel-hydride battery market after its takeover of Sanyo, which supplies batteries to Honda and Ford, without the divestment.
It was among the landmark cases for China's top competition authority, which handles mergers and acquisitions cases that have the potential to lead to monopoly.
The ministry said that by the end of June 2010, 95 percent of antitrust cases were approved unconditionally, while only five cases, including the Panasonic one, received the green nod with conditions.
"China's actions are in line with international practice with an aim to promoting a fair-competition environment in the market, in particular when merger and acquisition activity picks up as the financial crisis descends," said Wang Zhile, a researcher at Chinese Academy of International Trade & Economic Cooperation under the ministry.
Panasonic's deal with Corun is a decision that was made by the market players in fair conditions, according to Wang.