The Nikkei, Japan's largest business newspaper, and Kyodo News agency both reported a deal may be struck by the end of this year.

Sanyo said in a statement it was considering various options concerning its preferred shares but had yet to make a formal decision.

The deal, if realized, would be a major realignment for the Japanese electronics industry. It also would see major banks sell share holdings for cash, despite recent falls in stock prices.

Struggling Sanyo was rescued in 2006 with a 300 billion yen investment by Goldman Sachs, Sumitomo Mitsui Banking Corp. and Daiwa Securities SMBC, which received preferred shares making them the company's biggest shareholders.

The cash from a share sale to Panasonic would be helpful to the banks, which are feeling the effects of the global financial slowdown.

In September, Warren Buffet's Berkshire Hathaway Inc. said it was investing at least $5 billion in Goldman Sachs Group Inc. in a deal aimed at shoring up the bank's balance sheets and calming creditors. Last week Sumitomo Mitsui Financial Group cut its profit forecast for the current fiscal year by 63 percent.

For Panasonic, the recent plunge in share prices may present an opportunity. Sanyo's stock has fallen by almost a third over the last two months.

A deal would let Panasonic merge Sanyo's large battery operations with its own, as well as gain possession of Sanyo's solar panel business and enter the quickly growing industry.

Calls to Panasonic's headquarters in Osaka were not answered Saturday.

Panasonic changed its corporate name from Matsushita Electric Industrial Co. in October.

Sanyo's founder was a brother-in-law of Matsushita's founder and a former Matsushita employee.