Japan's Sanyo Electric Co plans to sell part of its battery operations to satisfy antitrust regulators ahead of its planned takeover by Panasonic Corp, a source close to the matter said.

Sanyo, the world's largest rechargeable battery maker, will sell its nickel-metal hydride battery operations in eastern Japan. The batteries are used in power tools and electronics products, the source said.

Sanyo is set to make the announcement after the Tokyo stock market closes at 3:00 p.m. (2 a.m. EDT) on Wednesday, the source said, who declined to be named because the matter is not public yet.

Panasonic said last December it would spend at least 400 billion yen ($4.4 billion) to take control of Sanyo, creating a powerhouse in the fast-growing market for batteries for hybrid cars.

Panasonic last month gained approval from European Union antitrust regulators to acquire Sanyo on condition that it shed some units.

Shares in Sanyo were down 1.4 percent at 217 yen, in line with the Tokyo stock market's electrical machinery index .IELEC.T.

(Reporting by Kiyoshi Takenaka; Editing by Edwina Gibbs)

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