Last weekend, in a statement to the Japanese press, Kenwood acknowledged that it had been in talks with JVC, but had no further information to deliver.

Yesterday it was announced in Tokyo that the two companies are bringing together their home audio and car electronics operations, and considering a complete merger under a holding company.

?

The news brings to an end long-running speculation about moves by Matsusihita, the parent company of Panasonic and Technics, to offload its ownership of JVC, which has reported losses for the past four years. This deal will take JVC off Matsushita’s books, and the Osaka-based company says it may well consider selling its stake in JVC once the company is on the path to recovery.

JVC had previously been in talks with US private equity company Texas Pacific Group, but those broke down recently. The new deal is backed by Kenwood and Japanese asset management company Sparx Group.

The original proposed deal with TPG value Kenwood at $550 (almost £270m), but Kenwood has now agrees to buy around £80m of JVC shares, giving it a 17% stake in the company, with Sparx, which is Kenwood’s largest shareholder, taking a further 13%.

That will leave Matsushita with a 37% stake in JVC, down from its previous 52% controlling interest.

JVC also announced yesterday a loss of almost 13bn yen (over £52m) for the first three months of this year, three times the level for the same period last year, highlighting the need for urgent action.

More after the break