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| Panasonic plans to acquire Blue Yonder for $ 6.5 billion |
Panasonic will take over US software company Blue Yonder, which focuses on supply chain management.
According to Nikkei Asian Review, the cost of the deal is expected to be around 700 billion yen ($ 6.5 billion).
The Japanese company hopes to expand devices that combine software, sensors and other devices to help the company improve operational efficiency.
This move marks a major change in the manufacturing business model, which previously relied on selling goods.
Several sources familiar with the matter confirmed that the negotiations had entered their final stages, but added that the two sides might still be unable to reach an agreement.
Blue Yonder uses artificial intelligence to forecast product demand and delivery dates, while also studying the supply chain to improve profitability.
The company was founded in 1985 and has around 3,300 customers worldwide, including Unilever in the UK and Wal-Mart in the US.
FY19 revenue increased 8% year-on-year to roughly $ 1 billion.
In 2020, Panasonic acquired a 20% stake in Blue Yonder for 86 billion yen.
The deal is expected to be the Japanese electronics firm's largest acquisition since 2011.
Panasonic spent 800 billion yen in 2011 to create two subsidiaries of "Sanyo Electric" and "Panasonic Electric Works".
The global supply chain software market is estimated to be around $ 15 billion in 2019 and is expected to grow around 10% every year.
As hardware-focused companies digitize their operations, the demand for such software is increasing.
The acquisition of Blue Yonder will likely be made with Panasonic's own funds, and free cash flow for the 2020 fiscal year ending March 31 is expected to reach 300 billion yen.
Capital investments are up nearly 40% year-on-year, and they also have around 1.4 trillion yen in cash and deposits.
Manufacturers around the world seek to reduce their dependence on hardware, and Germany's Siemens has improved profitability by combining its traditional advantages, process management and services acquired through acquisitions of other companies.