logo
Share SHARE
FONT-SIZE Plus   Neg

Sony, Sharp JV Seeing Dead End After Sharp Deal With Hon Hai Group

Japanese consumer electronics giant Sony Corp. (SNE, SON.L) agreed Tuesday to further amend its joint-venture agreement with peer Sharp Corp (SHCAY.PK), which could see an end to the joint venture. The joint-venture established Sharp Display Products Corp. or SDP, to produce and sell large-sized LCD panels and modules in July 2009. The agreement was once amended in April 2011.

The move comes after Sharp agreed earlier in the day to sell up to half of its 92.96 percent stake in SDP to Taiwan's Hon Hai Precision Industry Co. Sharp expects the deal to stabilize the LCD panel plant operation in Sakai and strengthen cost competitiveness by purchasing power of Hon Hai Precision.

"The market surrounding electronics industry is becoming severe, with rapid price decline due to the development of digital technology and increasing competition in a global market. We believe the timely action is necessary to tackle these changes in the market," Sharp noted.

Under the original joint-venture in July 2009, Sharp was to hold 66 percent ownership of the combined entity, while Sony held 34 percent stake. The joint-venture operates Sharp's LCD panel plant in Sakai-city, Osaka in Western Japan.

After the initial 10 billion yen investment in SDP for a 7.04 percent stake, the agreement further provided Sony the right to make a number of additional capital injections to raise the stake to 34 percent by the end of April 2011.

However, Sony put off further investment in to the joint venture even after an extension until March 2012, due to the continued weak demand for large LCD panels for TV sets.

Both the companies have now amended the agreement to agree that Sony will not make additional capital injections to SDP. They have also agreed to set until end of September 2012 as a time period to study and discuss the future direction of the joint venture, particularly with respect to the treatment of the 7.04 percent stake that Sony already has in SDP.

The latest amendment also requires Sharp to acquire all of Sony's shares in SDP even before end of September 2012, particularly if Sharp transfers some or all of its shares in SDP to any third party.

SNE closed Tuesday's regular trading session at $20.77, up $0.17 or 0.83% on a volume of 0.70 million shares. Meanwhile, SHCAY.PK closed at $6.85, up $1.16 or 20.39% on a volume of 1.54 million shares.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
United Parcel Service, Inc. has started to test the use of drones to make commercial deliveries of packages to remote or difficult-to-access locations. On Thursday, the package delivery giant and drone-maker CyPhy Works staged a mock delivery of urgently needed medicine from Beverly, Massachusetts to Children's Island, which is about three miles off the Atlantic coast. Luxury electric car maker Tesla Motors Inc. (TSLA), Thursday filed a lawsuit against state officials over its right to sell vehicles directly to consumers in Michigan. The lawsuit has been filed against Governor Rick Snyder, Secretary of State Ruth Johnson and Attorney General Bill Schuette as defendants. Tesla... e.l.f. Beauty (ELF), a maker of cosmetic products, priced its initial public offering above its target range and raised about $141 million. The Oakland-based company opened sharply up on Thursday's trading on the New York Stock Exchange. The company said it sold about 8.3 million shares at $17 in...
comments powered by Disqus
Follow RTT