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The companies said they were entering a long-term partnership aimed at promoting the competitive advantages and capacities in Europe.

One of the two key areas of cooperation will be research and development and a joint production platform for washing machines, refrigerators and built-in ovens.

The other area would be joint use of the sales network, marketing know-how and experience with distribution across Europe.

As part of the agreement, Panasonic will acquire EUR 10m in Gorenje stock, a move labelled by the companies as an expression of trust by Panasonic in Gorenje.

Panasonic plans to acquire 13% of Gorenje at EUR 4.31 per share, 16 cents above yesterday's closing price on the Ljubljana Stock Exchange, as part of a recapitalisation.

This capital hike will be followed by a second round of recapitalisation. An extraordinary shareholders' meeting dedicated to the capital hike will be called for 23 August, CEO Franjo Bobinac told the press today.

The deal would see Panasonic become Gorenje's second biggest shareholder, but Panasonic would pledge not to raise its holding above 13% for another five years.

To additionally sweeten the deal, Gorenje proposes a dual listing, probably in Warsaw, as a means of expanding the circle of potential investors and propping up the share price.

Bobinac hailed the deal as a "milestone for Gorenje and an important step in implementing the group's strategy".

He said the deal would result in synergies that will benefit both companies as well as consumers.

Panasonic Europe chairman Laurent Abadie said Gorenje was an "ideal fit" for Panasonic given its dedication to quality and focus on design.

The news came just before Gorenje shareholders decided at their annual meeting to leave last year's minuscule distributed profit of EUR 150,000 untouched, in what is the second year running that the company will not pay dividends.

Gorenje added almost 5% on Ljubljana Stock Exchange today to EUR 4.35.

The company has a rough few years behind it, as it was hit hard by the decline in consumer spending.

Gorenje posted EUR 1.26bn in revenue in 2012, down 1.5% over the year before, and a net profit of EUR 300,000.

The news about the Panasonic tie-up comes after the company has been busy restructuring in order to trim costs.

Over the past two years it has shut down several production locations in Western Europe and Slovenia, and accelerated relocation to lower-cost places such as Serbia.