Shares of JVC dropped to a five-year low today on news that Kenwood has resumed talks with Matsushita Electric Industrial to buy a stake in JVC.
The news comes after a deal with private equity firm Texas Pacific Group fell through.
Shares of loss-making electronics maker JVC fell as much as 14 per cent to 426 yen as the likely deal would involve it issuing new shares to Kenwood, diluting the value of existing JVC stock.
Talks with Texas Pacific fell apart after the private equity firm said it wanted JVC to sell off its music production business and asked Matsushita to continue investing in JVC to bolster JVC's credit, sources said.
But analysts are sceptical that Kenwood, which posted a 74 per cent drop in net profit in the business year ended March, would be any more successful than Matsushita to help struggling JVC battle price competition.
Kenwood, which was originally one of the companies interested in JVC before the bidding had been narrowed down to Texas Pacific, is in talks to buy 20 billion yen worth of new shares from JVC and then merge with JVC under a holding company, sources said.