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Panasonic Sells Tesla Stake for JPY 400 Billion, May Use Cash for Strategic Investments

Panasonic sells Tesla stake for $3.6 billion (roughly Rs. 26,710 crores), may use cash for strategic investments

Panasonic sold its stake in electric car maker Tesla for about JPY 400 billion (roughly Rs. 26,790 crores) in the year ended March, a spokesperson for the Japanese company said on Friday.

The sale comes as the bicycles-to-hair dryers conglomerate is seeking to reduce its dependence on Tesla and raise cash for investing in growth.

Panasonic’s battery business is dominated by Elon Musk’s Tesla, but the two firms have had a tense relationship at times with executives trading barbs publicly.

Panasonic bought 1.4 million Tesla shares at $21.15 (roughly Rs. 1,570) each in 2010 for about $30 million (roughly Rs. 220 crores). That stake was worth $730 million (roughly Rs. 5,410 crores) at the end of March 2020. The shares have gained almost seven fold since then and closed up 3.5 percent at $679.82 (roughly Rs. 50,430) apiece on Thursday.

“The impact of cryptocurrency assets may have pushed Tesla’s share price above its intrinsic value, making it a good time to sell,” said Hideki Yasuda, an analyst at Ace Research Institute.

Musk said in February his firm bought Bitcoin and would take payment in the cryptocurrency, a decision he later reversed, and his comments on Twitter drive swings in the price of such assets. Bitcoin price in India stood at Rs. 25.3 lakhs as of 12:45pm IST on June 25.

While Panasonic gave financial backing to Tesla when it was smaller, the automaker’s expansion means there’s no need for capital ties, Yasuda added. Panasonic’s shares were up 4.2 percent on Friday.

The stake sale will not affect the partnership with Tesla, the Panasonic spokesperson said, but comes as the automaker is diversifying its own battery supply chain.

Tesla has struck deals with South Korea’s LG Energy Solution, a unit of LG, and China’s CATL, with Reuters reporting the latter is planning a plant in Shanghai near the automaker’s production base.

Panasonic said earlier this year it would buy the shares of US supply-chain software company Blue Yonder that it does not already own, in a $7.1 billion (roughly Rs. 52,690 crores) deal. Its biggest such deal in a decade, the price raised the eyebrows of analysts who pointed to the firm’s spotty M&A track record.

© Thomson Reuters 2021

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