Consumer electronics giant Panasonic Corporation (NYSE: PC) said Thursday it will pull its equities from the New York Stock Exchange (NYSE:NYX) as it proceeds with a $2.7 billion restructuring that aims to reverse years of losing market share to Chinese and South Korean rivals.
The Japan-based company said it will apply to voluntarily delist its American Depositary Shares from the New York Stock Exchange (NYSE:NYX) and terminate the registration of those ADRs with the Securities and Exchange Commission.
Panasonic's reasons for delisting, which it aims to complete by July, include increases in trading volume of Japanese stocks by overseas investors as well as the similarities between U.S. and Japanese disclosure standards. The move also relieves Panasonic of the considerable expense of the reporting requirements that come with a New York Stock Exchange listing.
"The continued listing on the NYSE is not economically justified," the company said in an official release, "taking into account the fact that the trading volume of Panasonic's ADRs on the NYSE accounts for only a small fraction of the total trading volume of Panasonic's shares."
On Thursday, President Kazuhiro Tsuga said Panasonic will spend 250 billion yen ($2.7 billion) through 2015 to restructure its operations by rearranging its 88 business units into 49 units under four divisions, including transferring its logistics business to Nippon Express Co. Ltd (TYO: 9062). The restructuring will cut back on its electronics lines and expand instead its automotive-related products and home products such as batteries and solar panels.
Japanese media have reported that Panasonic may pull the plug on its plasma TV operations as part of a bigger plan to downsize its TV business, according to the AP.
Tsuga did not specify any job cuts connected to the new restructuring. But the company is under extreme pressure to drop weak units and reduce payroll ahead of announcing what is expected to be its second consecutive year with a net loss. Still, despite cutting more than 40,000 jobs in the past two years, Panasonic remains Japan's largest commercial employer with more than 300,000 people. Labor laws in the country can cost a company as much as three years' salary, yet employees at headquarters have dwindled from 7,000 to 150.
Tsuga's plan "isn't about what they are going to do, it's about what they are going to dump," Yuuki Sakurai, CEO and president of Fukoku Capital Management in Tokyo, told Reuters ahead of Thursday's briefing.
Panasonic will target a 50 billion yen net profit for the fiscal year ending March next year, with hopes of reaching 350 billion yen in operating profit two years later after eliminating unprofitable businesses and restructuring.
Panasonic, like other Japanese electronics manufacturers, has been squeezed by competition from South Korean and Chinese competitors.
One benefit for Japanese exporters such as Panasonic is the continued weakening of the yen, which boosts the value of overseas earnings. Still, Tsuga said he was not counting on the exchange rate because some parts of Panasonic's empire will be hurt by a weak yen.
Panasonic will remain listed on the Tokyo, Osaka and Nagoya exchanges.