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Wednesday, March 28, 2012
Taiwan buyers together get 10%
Hon Hai firms to acquire top Sharp stake
By MINORU MATSUTANI, KAZUAKI NAGATA and HIROKO NAKATA
Sharp Corp. said Tuesday it will sell its new shares to Taiwan's Hon Hai Precision Industry Co. and its three group firms to help boost profitability in the fierce global display rivalry, making the Taiwanese group collectively the largest Sharp shareholder with a stake of about 10 percent.
Hon Hai itself, which makes electronics products mainly for other brands, will be the second-biggest individual shareholder in Sharp after Nippon Life Insurance Co., whose holding will be reduced to 4.52 percent from 5.01 percent after the new share purchase by the four firms.
Under the agreement, Sharp will raise a total of ¥66.5 billion, with Hon Hai taking a 4.06 percent stake and its three group firms buying the rest.
Sharp is losing money as its foreign rivals, including Samsung Electronic Co. of South Korea and other Asian electronics makers, undercut the firm's main product line of liquid crystal displays, televisions and other consumer electronics.
Sharp's domestic rivals Sony Corp. and Panasonic Corp. likewise expect massive losses for the current fiscal year.
To provide attractive products quickly to global markets, "it is important to change the business model and establish a system to compete in the global market," said Takashi Okuda, Sharp's executive managing officer who will assume the presidency next month.
"Sharp has technologies to produce (unique) products," but the company, despite its strengths, has been struggling to appeal to consumers in the global marketplace in recent years due to the yen's strength and other outside factors, Okuda said.
"In order to solve these problems, it is crucial that we have cooperation within the value chain rather than managing everything by Sharp," he added.
By taking advantage of Hon Hai's production capability and cost-competitiveness, Sharp will be ready to quickly provide attractive products to the global markets, Okuda said.
Other than Hon Hai, Q-Run Holdings Ltd. will hold 2.64 percent, Foxconn (Far East) Ltd. will have 2.53 percent and the fourth company will hold less than 1 percent.
Sharp already has business connections with the Hon Hai group, to which it sells components.
Sharp, Japan's largest maker of liquid-crystal-display panels, joins Sony and Panasonic in naming new leaders after falling television prices and a strong yen led them to make dire earnings forecasts.
Sharp expects a ¥290 billion net loss in the year ending Satuday, the firm said Feb. 1, reversing an earlier prediction for a ¥6 billion profit.