<span style="font-family: "Frutiger 45 Light";">To pool development resources and save costs Kenwood and JVC have announced plans to start working together in the car and home electronics business. In car audio, the total of both companies’ business size currently reaches $1.4 billion. There are several advantages of a larger business scale and management alliance in R&D, purchasing, and production through effective sharing of common resources. <o:p></o:p></span>
<span style="font-family: "Frutiger 45 Light";">Although the merging of both operations under a holding company is presently under discussion, there is no confirmation as of this date. As part of the alliance, JVC will issue a total of $290 million worth of new shares to Kenwood and Kenwood’s top shareholder, Sparx Group.<span style=""> </span>Kenwood will pay $167 million for a 17% stake in JVC while Sparx will buy $125 million worth of shares, acquiring a 12.8% stake.<o:p></o:p></span>
<span style="font-family: "Frutiger 45 Light";">Kenwood USA Corporation President Shoichiro Eguchi said “Digital merchandise that requires large-scale investment for production and extensive software development is now the centerpiece of the consumer electronics industry. The overwhelming trend of digital merchandise is shorter product development cycles and fiercely aggressive pricing. This trend has made the consumer electronics market extremely competitive, however Japan Victor and Kenwood agree that a strategic alliance in car electronics and home/portable audio, as well as the unification of both companies’ management, would bring opportunities for success in a challenging AV market.”<o:p></o:p></span>