Sharp Corp. has agreed to issue shares worth roughly 10 billion yen (US$108.7 million) to Samsung Electronics Co. of South Korea to raise much-needed cash.
The investment will give Samsung a roughly 3% stake in Sharp, effectively making it Sharp’s No. 5 shareholder overall and the largest, except for financial institutions.
Sharp already supplies LCD panels for 32-inch TVs to Samsung. Hit by Apple Inc.’s decision to reduce output of the iPhone 5, the capacity utilisation rate at Sharp’s main LCD panel plant in Japan has sunk under 50%. For Samsung, a capital tie-up with Sharp will enable it to hold down new investment in LCD panel operations by ensuring stable supply from its Japanese rival.
A year earlier, Sharp signed a capital tie-up agreement with Hon Hai Precision Industry Co. of Taiwan that would have given the Taiwanese company a 9.9% interest. But that proved unsuccessful as Sharp’s stock price plunged. Negotiations are on between the two companies to reach a decision.