Sanyo Electric Co. will spin off its mobile phone business and sell it to Kyocera Corp. on April 1, the two companies said Monday.
The cost of the deal is about ¥50 billion, they said.
Under the agreement, the sale will include Sanyo's cell phone business as well as operations related to personal handy-phone system handsets. Kyocera will use both brand names for the time being, the firms said.
Tottori Sanyo Electric Co. will not be included in the deal.
"To survive the competition (in the mobile phone market), we need to expand overseas sales channels. I believe that this integration can increase our competitiveness," said Kyocera President Makoto Kawamura.
The mobile phone business subject to the sale generated ¥277.35 billion in sales in fiscal 2006, accounting for 12.5 percent of Sanyo's total consolidated sales.
The deal, which will mark the first major realignment among Japanese mobile phone makers, is a core part of Sanyo's restructuring efforts to turn around its struggling operations.
In fiscal 2006, Sanyo incurred a group net loss of ¥45.36 billion, its third straight year of red ink, due to huge restructuring costs as well as poor sales of digital cameras and mobile phones.
Sanyo will now focus more on its profitable products, such as rechargeable batteries and industrial equipment.
Kyocera said it will be able to acquire Sanyo's strong customer base in Japan and North America to reinforce its mobile phone business.
Sanyo entered the cell phone business later than many of its domestic rivals. But the business grew rapidly and was one of the company's biggest cash cows until the segment posted a loss in fiscal 2006.
