Nikkei Report: Samsung set to buy 3% stake in Sharp

Posted on March 5, 2013 09:18 am

South Korean electronics giant Samsung is set to buy a three-percent stake in struggling Japanese rival Sharp via a capital increase, a press report said today. The deal would give Samsung greater access to smartphone and tablet computer screens. According to Japanese economic newspaper Nikkei online edition, Sharp would sell Samsung new shares worth around $108 million, and use the funds it earned to bolster its bottom line. An official announcement is expected tomorrow. Sharp has suffered from tough competition in the market for liquid crystal screens that has pushed prices lower, and would now provide such products made at its plant in Kameyama, central Japan, to Samsung on priority. The plant currently ships many of its screens to Samsung’s archrival Apple, and the agreement should allow Samsung to avoid having to invest massively in new production capacity.

Sharp has already signed an accord with the Hon Hai, that would see the latter acquire a 9.9 percent stake in Sharp for 550 yen per share. The reports said the deal would help Samsung boost its access to screens used in its popular smartphones and tablet computers, a sector where Sharp’s technology is a world leader. Sharp is expected to use the funds to help shore up its bleeding bottom line. If confirmed, the decision to accept a capital injection from a foreign firm, a rare move for a Japanese company would mark a major comedown for both the company and Japan’s manufacturers. Japan’s electronics giants have suffered myriad problems including a strong yen, weak demand in key export markets, fierce competition especially in their struggling TV divisions and strategic mistakes that ruined their finances. Sharp expects to close its fiscal year to March with a net loss of 450 billion yen, but has backed off earlier warnings over its ability to survive.



Contador Harrison