Panasonic: Establishment of New Company to operate Security Systems Business

Panasonic announced that it will establish a new company to operate its security systems business in Japan and overseas, and that it has reached an agreement for strategic co-investment with Polaris Capital Group.

Background Information
The Security Systems Business Division, which is part of Panasonic’s Connected Solutions Company, has a roughly 60-year history of developing security cameras and advanced edge devices and combining these with unique software such as facial recognition to meet the needs of the market, and has established itself as a top brand in the Japanese security camera market.

With rising global demand for security and safety, the security related business is a field that is forecast for growth; and by establishing the new company and concluding a co-investment agreement with Polaris, Panasonic believes that it can achieve stable growth in this market.

The new company will be able to utilize Polaris’ knowledge and experience cultivated from numerous investments into manufacturers and other large-scale enterprises. It will build on the strengths of the Division while benefitting from management and resources of Polaris to seamlessly implement the necessary structure to operate as an independent organization. Strengthening its solutions capabilities with proactive alliances and M&As, the new company will aim to enhance its revenue and profitability globally centered on the North American market. With new and next-generation products and services, and a strategic growth plan to expand sales of medical camera modules, the new company will build a solid foundation as an independent entity with a potential public offering in the future.

All about the New Company
The new company will be formed into an independent entity from the Connected Solutions Company’s Security Systems Business Division and the industrial & medical vision compact camera R&D department of its Innovation Center. The Public Safety sales and development functions of Panasonic System Solutions Company of North America (PSSNA), and the security camera manufacturing factory in China — Panasonic System Networks Suzhou (PSNS) — will become subsidiaries of the new company.

The new company’s name will be “Panasonic i-PRO Sensing Solutions Co., Ltd.” and it is planned to start operation on October 1, 2019, assuming approval from relevant government agencies. It will contain three operations businesses:

1.  Surveillance system business (intelligent surveillance)
2. Industry-specific business (public solutions)
3. Module business (industrial & medical vision)

A special purpose company will be established as the successor, in which Polaris Private Equity Fund IV and Panasonic will hold 80% and 20% of the shares respectively.

Markets and Sales

Gerard Fígols, European Category Owner Security at the Panasonic Business Europe, explains to GIT SECURITY: ‘The security market is growing and going through some important changes. The trend of security business needs to go towards IoT. Security cameras, for example, collect so much data, but companies are still not able to govern the data properly. It needs to be well-managed and the security sector is not yet ready to deliver this potential. Being able to create these changes, Polaris' investment was necessary to speed up actions for Panasonic. Yet, it is very important to us that our customers as well as business and channel partners know that nothing will change for Europe. They will have the same contacts, brand, product names and quality. We will transition towards innovation together with them.’

‘To make essential changes happen, security companies have to open up to one another. Panasonic is still an expert in video surveillance, Polaris are experts at investing and growth – this makes them a perfect match to remain at the forefront of innovation and development and be therefore open for necessary changes towards interconnection’, Fígols continues.

After establishment, the new company’s security cameras and software are planned to be sold under the Panasonic brand: by the new company in the US market; through Panasonic System Solutions Japan (PSSJ) in the domestic market; and through existing Panasonic sales companies in other regions including Europe, China, Southeast Asia, Oceania and Canada, which will all sign sales agreements with the new company.

Jörg Hufschmid, Manager Field Marketing Europe, explained to GIT SECURITY: “Apart from the possible positive effect of future product developments, there will be no changes for Panasonic customers as the whole sales and service team will stay the same. Panasonic is committed to support their customers and partners in the way they are used to. Partners and customers will experience little to no disruption, as Panasonic will fully maintain day-to-day operations as before. In the next years, all stakeholders including the production facilities, Quality Management and the Research and Development section are committed by contract to maintain all the operations as before. In the future, the market will see strong investments in R&D and new product development.”