sold off some of its LCD manufacturing business to Hon Hai Precision
we knew the company had fallen on tough times, we just didn't realize how bad things truly were. That joint venture
it formed with Sony, well, it's all but over at this point. The two companies have amended their deal with each other and Sony has decided not to inject any more capital into the project. That's not entirely surprising since the relationship was already starting to show signs of strain
, but the partnership could crumble at any moment. A study period has been designated, through the end of September, to decide what the future holds for the two regarding the production and purchase of large panel LCDs, but at any time Sony can simply demand that Sharp buy back its shares and leave the venture. For Sharp's sake, we certainly hope Hon Hai is in this for the long haul. Check out the legalese stuffed PR after the break.
Sharp and Sony Amend Agreement regarding Joint Venture to Produce and Sell Large-Sized LCD Panels and Modules
Sharp Corporation ("Sharp") and Sony Corporation ("Sony") announced that they have agreed to further amend the joint venture agreement originally executed by the parties in July 2009, as amended in April 2011, for the establishment and operation of Sharp Display Products Corporation ("SDP"), a joint venture to produce and sell large-sized LCD panels and modules.
Pursuant to the April 2011 amendment, Sharp and Sony discussed possible further contributions by Sony to SDP, but they have agreed that Sony will not make additional capital injections to SDP. The parties have also agreed to set a new time period, up to the end of September 2012, to permit study of the future direction of the joint venture, including with respect to the treatment of the shares that Sony has in SDP (7.04% of all issued shares) and possible purchases of large-sized LCD panels and modules. Under the March 2012 amendment, Sony may require that Sharp acquire all of Sony's shares in SDP, even before the end of September 2012, upon the occurrence of certain events such as a transfer by Sharp to any third party of some or all of the shares that Sharp has in SDP.
On July 1, 2009, Sharp transferred its LCD panel plant in Sakai City, Osaka Prefecture, to SDP. On December 29, 2009, Sony invested 10 billion yen into SDP in exchange for new shares issued by SDP to Sony (representing 7.04% of the issued shares in SDP) and, as a result, SDP became a joint venture company of Sharp and Sony. Since then, Sharp and Sony have continued discussion about possible further contributions by Sony to SDP.
[Impact on the consolidated financial information of Sharp, as a parent company of SDP]
No material impact from this amendment is anticipated on Sharp's consolidated financial results for the fiscal year ending March 31, 2012.
[Impact on the consolidated financial information of Sony]
No impact from this amendment is anticipated on Sony's consolidated financial forecasts for the fiscal year ending March 31, 2012.