Mumbai: Japan’s Panasonic Corp. will buy a 76.2% stake in Bangalore-based Firepro Systems Pvt. Ltd, a maker of fire detection systems and other security products, for an undisclosed sum.
The purchase will allow Panasonic to venture into both residential and commercial markets, along with its wholly-owned local unit Anchor.
In 2007, Panasonic had acquired an 80% stake in Anchor Electricals Pvt. Ltd for Rs 2,000 crore.
Panasonic’s acquisition of Firepro comes nearly a year after the firm was said to be in talks with US-based United Technologies Corp. for a takeover for nearly $200 million.
Through the acquisition, Panasonic plans to enter new areas, expanding its focus outside Japan and pursue a solutions- and systems-oriented approach from a product-oriented one, it said in a statement.
Panasonic will acquire a portion of Firepro’s shares owned by financial investors while Anchor will invest in Firepro by buying new shares. This will result in a significant majority stake for Panasonic in Firepro.
Existing shareholders, including N.S. Narendra, chairman and managing director of Firepro, will continue to hold their stake in the company. Other shareholders in Firepro include private equity firms Standard Chartered Private Equity Ltd and AIG. In 2009, Firepro had raised Rs 150 crore from Standard Chartered, while in 2006, AIG had invested Rs 50 crore in it.
Founded in 1992, Firepro has a team of more than 600 people as of 30 April 2012 and revenue of about Rs 700 crore. Firepro has 14 offices across the country and offices in the United Arab Emirates, Australia, Singapore, Malaysia and Germany. It has implemented more than 1,500 projects and gets nearly a quarter of its revenue from overseas markets.
“Firepro’s depth of customer relationships and its strong engineering, procurement and construction capability will strengthen Panasonic’s business in non-residential and infrastructure sectors in India and will also further Anchor’s objective of gaining a leadership position in electrical construction materials market,” the company said in a statement.
Panasonic will aim to realize further growth by capital participation in Firepro to expand into “non-residential” areas including offices, buildings, and commercial facilities.
Panasonic and Firepro could not be contacted for comments despite repeated attempts.
Panasonic said in a statement that there would not be a material impact on its financial outlook for FY2013 because of the acquisition. Panasonic on Friday reported a loss of $9.7 billion.
Experts say the acquisition indicates that Panasonic is customizing its strategy for India.
“Looking at the investments that are coming into commercial and industrial infrastructure in India, it’s a good area for electronics makers to focus on. There is a huge opportunity,” said Saloni Nangia, president of consultant Technopak Advisors Pvt. Ltd.