Home > Business > Business News
Thursday March 7, 2013 MYT 12:00:00 AM
Thursday April 18, 2013 MYT 1:21:15 AM
TOKYO: Sharp has announced a US$111mil capital tie-up deal with South Korean rival Samsung, in a rare move for a Japanese firm that underscores the fading fortunes of its electronics giants.
Sharp, which is scrambling to repair its battered balance sheet, said Samsung would buy 10.4 billion yen of new shares, or a 3% stake in the Japanese firm, making the smartphone and tablet maker its biggest foreign shareholder.
Reports of the deal yesterday sent Sharp shares soaring more than 17% in early trade before ending 14.04% higher. Samsung was up 0.65%. The pact was announced after the Tokyo and Seoul markets had closed.
The Japanese firm said the deal would help shore up its troubled finances while boosting “mutual trust” as the firms look to benefit from Sharp's leading liquid-crystal display technology for mobile phones and tablets.
Samsung said the investment “would lay a firm foundation ... to secure a steady supply of LCD panels from diversified sources.”
Sharp, which has announced a separate 4.94 billion yen capital injection deal by US chipmaker Qualcomm, is also major panel supplier to Samsung rival Apple.
Last month, reports said an expected investment in Sharp by Taiwan's Hon Hai Precision, which makes Apple gadgets in China, had been shelved.
The decision to accept a capital injection from foreign firms marked a major comedown for both Sharp and Japan's manufacturers, said Hiroshi Sakai, chief economist with SMBC Friend Research Centre.
“For Japan, it is symbolic and shocking news as Sharp, which used to be a frontrunner in the panel industry, is struggling while its rival Samsung has raced past it,” he said.
He added that the news “should not be any surprise” given Samsung's leading position in the global electronics market.
However, the deal would not solve all of Sharp's woes, he added, as the firm cuts jobs and overhauls its business after saying in February its loss in the nine months to December had doubled to about US$4.6bil.
Given the sector's struggles, deals between Japanese and foreign rivals were likely to rise, Sakai said. AFP
Tags / Keywords:
News, Business, Business, Business, sharp, samsung, japan
Copyright © 1995-2014 Star Publications (M) Bhd (Co No 10894-D)