Sony formally quits Sharp LCD joint venture, takes back every yen it invested

After Sony cut off its supply of capital to the ill-fated Sakai production plant that it jointly owns with Sharp, it became clear that the final goodbye may be little more than a formality. And here it is, in the form of a cold, resolute press release stating that Sony is selling its seven percent stake back to Sharp and taking back the 10 billion yen ($126 million) it originally invested. The only reason given is the "rapidly changing market for LCD panels and LCD televisions," which is a polite reference to the fact that profits from big TVs are well below what these companies predicted back in the heady days of 2008 and early 2009, when the impact of the global economic crisis loomed without yet being fully apparent. Fortunately for Sony, which is in the delicate stages of reform, the solid pre-nuptial agreement it had in place with Sharp should protect the company from having to revise its financial forecasts for the coming year -- not that those were particularly great in the first place.

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Sharp and Sony to terminate joint venture to produce and sell large-sized LCD panels and modules

Sharp Corporation ("Sharp") and Sony Corporation ("Sony") today announced that their joint venture relationship to produce and sell large-sized LCD panels and modules will terminate, and that Sony will sell its shares (representing 7.04% of the issued shares) in Sharp Display Products Corporation ("SDP") to SDP*. In consideration for the sale of shares, Sony will receive cash consideration equal to its original investment of 10 billion yen to be paid by SDP*. Both the sale of shares and the payment of cash consideration will be completed by the end of June 2012.

On July 1, 2009, Sharp transferred its LCD panel plant in Sakai City, Osaka Prefecture, to SDP, a wholly-owned subsidiary of Sharp. 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 of SDP) and, as a result, SDP became a joint venture company of Sharp and Sony as of the same date. In light of the rapidly changing market for LCD panels and LCD televisions, in March 2012 Sharp and Sony agreed to amend the original joint venture agreement to provide that Sony would not make additional capital injections in SDP. Based on this amendment, the companies agreed to study studied the future direction of the joint venture and other potential business relationships between the parties, including with respect to Sony's interest in SDP.

* In the event SDP is not able to purchase or pay for those shares due to applicable legal restrictions on acquiring its own shares or for any other reason, Sharp will purchase those shares from Sony.
Impact on the consolidated financial information of Sharp, as the parent company of SDP
No material impact is anticipated on Sharp's consolidated financial forecasts for the fiscal year ending March 31, 2013.
Impact on the consolidated financial information of Sony

No material impact is anticipated on Sony's consolidated financial forecasts for the fiscal year ending March 31, 2013.

Sharp Display Products Corporation

Representative:
Hiroshi Saji, President
Location:
1 Takumi-cho, Sakai-ku, Sakai City, Osaka Prefecture
Principal Business:
Production and sales of large-sized LCD panels and modules
Date of Establishment:
April 1, 2009 (as a wholly-owned subsidiary of Sharp)
Joint Venture

Establishment Date:
December 29, 2009
Share Holding Ratio:
Sharp 92.96%, Sony 7.04% (as of end of April, 2012)

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Sony formally quits Sharp LCD joint venture, takes back every yen it invested