Panasonic wants to buy the Blue Yonder for $ 6.5 billion
Panasonic is set to acquire US software company Blue Yonder, which is primarily focused on supply chain management.
According to the Nikkei Asian Review, the deal is expected to cost around 700 billion yen ($ 6.5 billion).
Panasonic wants to buy the Blue Yonder for $ 6.5 billion
The Japanese company wants to expand the hardware that combines software, sensors and other devices to help companies improve operational efficiencies.
The move marks a major change in the manufacturing business model, which until now has been dependent on the sale of goods.
Multiple sources familiar with the matter confirmed that the negotiations are in their final stage, but added that there is still a chance that the two sides will not reach an agreement.
Blue Yonder uses artificial intelligence to forecast product demand and delivery dates while reviewing supply chains to improve profitability.
The company was founded in 1985 and has around 3,300 customers worldwide, including Unilever in the UK and Walmart in the US.
Its sales in fiscal 2019 increased by 8 percent from the previous year, to about $ 1 billion.
In 2020, Panasonic acquired a 20 percent stake in Blue Yonder for 86 billion yen.
The deal should be the Japanese electronics firm's largest acquisition since 2011.
Panasonic spent 800 billion yen in 2011 to make Sanyo Electric and Panasonic Electric Works wholly-owned subsidiaries.
The global market for supply chain software was estimated at $ 15 billion in 2019 and is expected to increase by about 10 percent annually.
Demand for this type of software is increasing as hardware-focused companies digitize operations.
The acquisition of Blue Yonder is likely to come from Panasonic's own funds, and free cash flow for the 2020 fiscal year ending March 31 is expected to reach 300 billion yen.
Capital investment increased nearly 40 percent from the previous fiscal year, and the company also has about 1.4 trillion yen in cash and deposits.
Manufacturers around the world are trying to become less hardware dependent, and Germany's Siemens has increased its profitability by combining its traditional strengths with plant management equipment and services acquired through acquisitions of other companies.