The announcement, which was expected after several leaks to Japan's influential Nikkei business daily, was made after the boards of directors at both companies met Friday morning. A project team will be immediately set-up to start what is likely to be an intensive series of meetings, discussions and due diligence before a definitive deal can be concluded.
Sanyo has been struggling to turn around its business for the past few years. The company recorded its first profit in four years in its most recent fiscal year, ended in March 2008. Despite being battered by fierce competition in the home and consumer electronics markets, the company remains the world's biggest manufacturer of lithium-ion batteries and an innovator in green-energy products such as solar cells.
Panasonic is Japan's biggest consumer electronics company and has a large battery business of its own. It's keen to get its hands on Sanyo's battery and solar expertise as well as know-how in areas such as mass-production, Sanyo's knowledge of which it called "remarkable" in a statement.