Kenwood Corporation Reaches Basic Agreement to Acquire the Wireless Communications Equipment Business of Toyo Communication Equipment
Deal strengthens domestic wireless communications equipment business and readies the Company for further development
Kenwood Corporation (President and CEO: Haruo Kawahara; Headquarters: Hachioji-shi, Tokyo; "the Company") announced today that it has reached a basic agreement with Toyo Communication Equipment Co., Ltd. (President and CEO: Eiichi Yoshikawa; Headquarters: Kawasaki-shi, Kanagawa Prefecture) to acquire the wireless communications equipment business of the latter company. The acquisition is set for the May of this year.
Information Regarding the Basic Agreement
The units to be transferred are Toyocom Network Systems, an internal company of the Toyo Communication Equipment that is responsible for wireless communications equipment, and Toyocom Engineering Co., Ltd, a subsidiary company that provides maintenance services in the same field. 50 people in total are employed by the two firms.
The transfer method will either be in the form of a company divestiture or a transfer of operations. Both companies are currently in discussions to establish the most beneficial method to execute the agreement.
Purpose of Business Transfer/Succession Activities
Kenwood Corporation is broadly comprised of three business units; car electronics, home electronics and communications (wireless communications equipment). The communications business has a long history in that the Company was founded on products in this field (radio parts with a particular emphasis on high-frequency coils) more than 57 years ago under the name of Kasuga Radio Co., Ltd. Today, the business unit contributes a significant portion of the Company's overall financial performance by developing, manufacturing and selling commercial, amateur and application-specific low-power wireless communications equipment (radios).
Business is especially strong in the commercial market where the Company made efforts to digitalize its products before most other competitors. As a result, the Company now has a leading global presence (No. 2) in the marketplace. Truth be told, the Company's technology and performance in this field is better known internationally because of such achievements as becoming the official supplier of cutting-edge wireless communications equipment for a famous F-1 (Formula 1) race team. As such, Kenwood has become a major player in the international market (with a particular emphasis on the US market) for commercial wireless communications equipment. The concern, however, is that only approximately 10% of revenues are generated from the domestic market*, and therefore, the Company saw a need to expand this market in the future.
By executing this agreement, Kenwood Corporation will be acquiring the strong presence of Toyo Communication Equipment in the field of wireless communications. In addition the Company will be able to effectively utilize the networks that Toyo Communication Equipment has established over the years with governmental authorities and power companies. Moreover, the Company will be able to take advantage of the vast resources of the acquired entities. With its newfound presence, Kenwood Corporation plans to further expand its domestic wireless communications equipment business. In addition, the current shift to digital products in the domestic wireless communications equipment market is a huge business opportunity for the Company. With this in mind, the Company plans to carry out activities that will further the development of the market domestically.
NOTE*: In the domestic market, Kenwood Corporation's wireless communications equipment are currently utilized in the areas of regional development, taxis, GPS-based taxi dispatch centers, and golf cart management systems. All of these uses require a permit. Other relatively small organizations such as schools and stores also use simplified wireless communication equipment at the individual level. These uses do not require a permit.
Schedule of Transfer Activities
Profile of Acquired Entities' Parent Company
Profile of Acquired Entities
Profile of Kenwood Corporation and its Communication (Wireless) Business
[Profile of Communications (Wireless) Business]
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