Permira, TPG in race for JVC: sources

TOKYO (Reuters) - Private equity firms are racing to buy Panasonic maker Matsushita Electric Industrial Co. Ltd.'s struggling consumer electronics unit, JVC, sources familiar with the situation said on Monday.

Permira, Texas Pacific Group and CCMP Capital Asia have all expressed interest in the firm. Another source close to the deal said about five parties are currently involved in the battle for Victor Co. of Japan Ltd. (JVC), whose shares shot up 15 percent.

"One of them has actually submitted a bid while the other two are very interested," one of the sources said. "Due diligence is ongoing."

Loss-making JVC has been one of few sources of concern left for Matsushita, which finished its own major restructuring in 2005 and is now enjoying healthy profit from its plasma TV and digital camera operations.

"Other funds looked at this deal but walked away because it is very complicated as it is part of a bigger group and because it is loss-making," one of the sources said.

Japanese audio equipment maker Kenwood Corp., which had been seen as a potential buyer, is unlikely to bid for JVC after unsuccessful preliminary talks, different sources close to the matter said.

JVC was once a pioneer of VHS-format videocassette recorders but its earnings have been eroded by intensifying competition. It swung to a net loss of 1.45 billion yen in October-December from a profit of 75 million yen a year earlier, hit by steep price falls in flat televisions.

JVC's management is also looking at acquiring the company in a buy-out with U.S. private equity firm Cerberus, a source told Reuters in December.

Shares in JVC, owned 52.4 percent by Matsushita, soared 14.9 percent to end at 602 yen, boosting its market value by 20 billion yen ($165.6 million) to 153 billion yen.

In a recent example of foreign investors taking a major stake in a troubled Japanese consumer electronics maker, Goldman Sachs Group Inc., along with Daiwa Securities SMBC and Sumitomo Mitsui Banking Corp, last year bought a total of 300 billion yen worth of preferred shares in Sanyo Electric Co. Ltd.

Daiwa Securities SMBC is the investment banking arm of Daiwa Securities Group Inc. and Sumitomo Mitsui Banking Corp. is a unit of Sumitomo Mitsui Financial Group Inc.

Potential outside bidders for JVC include Osaka-based Funai Electric Co. Ltd.

Matsushita and JVC said in statements on Saturday that nothing had been decided.

(Additional reporting by Kentaro Hamada, Edwina Gibbs and Kiyoshi Takenaka)