Tokin will undergo a full restructuring, closing three of its seven domestic plants and halving its workforce to 9,500. The entity will cease non-performing operations in order to focus on automotive batteries, which will begin to be shipped to Nissan Motor Co. and Nissan’s partner Renault SA of France this spring.

“We’re a year or two ahead of the competition in automotive battery technology,” said Tokin President Masakazu Okabe at the Jan. 27 press conference to announce the takeover. Okabe’s confidence stood in marked contrast to the recent downward revision to the firm’s earnings forecast and the impending restructuring.

NEC will provide Tokin with a capital infusion in exchange for an allotment of new shares. NEC will also acquire Tokin stock from other shareholders in a swap deal, making Tokin a wholly owned subsidiary by June.

NEC has agreed to the deal despite its own finances being stretched, with a net loss of about 200 billion yen projected for the year ending March. NEC might have felt that it had little choice but to make the acquisition—the deadline for delivering Tokin’s automotive batteries to Nissan-Renault is rapidly approaching.

Tokin will supply the electrodes for the Li-ion batteries that Nissan will use in electric cars to be rolled out in 2010. Tokin will invest ¥13.7 billion (US$154 million) to launch production this year, with output capacity reaching the equivalent of 65,000 cars by 2011.

Tokin electrodes are seen as key to Nissan’s electric car operations, and as such, NEC stepped in to backstop Tokin and keep this cash cow alive.