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Panasonic wants to buy Blue Yonder for $6.5 billion


Panasonic is to acquire The American software company Blue Yonder, which focuses primarily on supply chain management.

According to the Nikkei ASEAN Review, the deal is expected to cost about 700 billion yen ($6.5 billion).

The Japanese company wants to expand hardware that combines software, sensors, and other devices to help companies improve operational efficiencies.

This step represents a major change in the manufacturing business model, which has so far relied on the sale of goods.

Several sources familiar with the matter confirmed that the negotiations were in their final stage, but added that there was still a chance that the two sides would not reach an agreement.

Blue Yonder uses artificial intelligence to predict product demand and delivery dates while reviewing supply chains to improve profitability.

The company was founded in 1985 and has about 3,300 customers worldwide, including Unilever in the UK and Walmart in the US.

Its sales in the fiscal year 2019 increased by 8 percent over the previous year, reaching nearly $1 billion.

In 2020, Panasonic acquired a 20 percent stake in Blue Yonder for 86 billion yen.

The deal is supposed to be the largest acquisition of the Japanese electronics company 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 programs was estimated at $15 billion in 2019 and is expected to increase by about 10 percent annually.

The 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 fiscal year 2020 ended March 31 is expected to reach 300 billion yen.

Capital investment increased by about 40 percent over the previous fiscal year, and the company also owns 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 strength of factory management equipment and acquired services through the acquisition of other companies.