Texas Pacific Group to Buy JVCby John NeelyPublished on Mar 16, 2007 12:41 PM 
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March 16, 2007 - Matsushita, the parent company of JVC has accepted an offer by TPG (Texas Pacific Group), a U.S. private equity firm to acquire its JVC subsidiary. According to EETimes, the two companies are in active talks to conclude the deal by the end of this month. Camcorderinfo.com published an article on June 6th in which we speculated that Matsushita’s commitment to its JVC unit might be waning due to the division’s underperformance relative to the company’s other holdings. Based on JVC’s closing share price, the deal would be worth about $680 million. At first glance, that seems to be a relative bargain for a company that has been a consumer electronics innovator, and a leading developer of new camcorder technologies. JVC developed the HDV standard, and introduced the first-ever consumer HDV camcorder, the GR-HD1 in 2004. JVC was also the first to bring HDD-based camcorders to market. While JVC has often been ahead of the curve in terms of developing and launching new camcorder technologies, it has struggled to make its first-mover advantages last.
Sony soon followed JVC’s HD1 with a series of successful consumer HDV camcorders including the HDR-HC1 in 2005 and the HDR-HC3 last year. The same company surged into the HDD camcorder arena last year with a slew of new models that unseated JVC’s Everio monopoly. In our 2006 tests, Sony’s debut HDD camcorder, the DCR-SR100 outclassed JVC’s top consumer camcorder of the year, the Everio GZ-MG505.
JVC, known officially as Victor Company of Japan Ltd, will reportedly post a loss of 1 billion yen for the fiscal year ending March 31, 2007. The company’s Everio line of HJDD camcorders remains popular with consumers, and the upcoming HD7 (Review, Specs, Recent News, $1529) camcorder has generated tremendous buzz in the consumer video community. At the same time, JVC’s sales of rear projection televisions has sagged, as competition for HD televisions has resulted in dropping prices for superior plasma screens.
Texas Pacific Group is a San Francisco-based private equity firm with a history of investment in technology and Asia. In 2006, Buyouts Magazine names TPG the Buyout Firm of the Year, citing the company’s foresight in its early China investments, and its investment in a bankrupt Continental Airlines in 1993. The firm’s investment in Continental, a then struggling company eventually reaped TPG a 9.5 x return on its initial $65 million investment.
If TPG’s past investment performance is any indication, JVC’s departure from the Matsushita fold could bode well for the consumer camcorder industry. Panasonic, a wholly-owned subsidiary of Matsushita, and JVC, of which the company owns a controlling stake, compete directly with one another on the consumer camcorder market. TPG’s acquisition of JVC may reinvigorate the company, and allow it to compete more successfully against consumer electronics behemoths Sony, Canon, and erstwhile bedfellow Panasonic.