Hon Hai Precision snaps up 10 percent of Sharp in display tie-up

For those unaware, going at it alone in the cutthroat display business isn't exactly a recommended business approach. To wit, Sharp -- once a mainstay in the LCD industry -- has just sold an approximate 10 percent stake of itself to Taiwan's Hon Hai Group. Sharp will be issuing new shares worth $808 million to Hon Hai Precision Industry Co., and we're told that it'll go down as the largest investment ever in a Japanese company by a Taiwanese one. Moreover, Hon Hai will grab half of Sharp's 92.96 percent stake in its LCD panel factory in Sakai, Japan. Though it may not be obvious, seeing Sharp accept this fate is hugely symbolic, and it's happening just as the company gets ready to eat "multibillion-dollar losses" for this fiscal year -- which just so happens to be the 100th anniversary of its founding. Sharp executive managing officer Takashi Okuda said this during a news conference in Tokyo: "We have tried to do everything by ourselves, but the environment is tough." Here's hoping for a better tomorrow, though.

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Sharp Establishes Strategic Global Partnership with Hon Hai Group

Osaka, Mar 27, 2012 (JCN Newswire via COMTEX) -- Sharp Corporation (hereinafter "Sharp") entered into agreement today with Hon Hai group, the world's leading EMS (electronic manufacturing service) company, to establish strategic global partnership to collaborate in various business fields, and to issue new shares to Hon Hai group through third-party allotment (hereinafter "the issuance of new shares through third-party allotment").

The market surrounding electronics industry is becoming severe, with rapid price decline due to the development of digital technology and increasing competition in a global market. We believe the timely action is necessary to tackle these changes in the market.

Looking at the business environment, Hon Hai Precision Industry, the key company of Hon Hai group, saw Sharp's LCD technology with high reputation, and decided to procure ultimately up to 50% of large-size LCD panels and LCD modules manufactured at the LCD panel plant in Sakai-city, Osaka, Japan. The LCD panel plant will be mutually managed by one company set by partner companies.

In addition, this partnership allows each company to establish a new business model, combining each company's strength, to launch cost competitive component and products fit to market demand by utilizing Sharp's potential for the development of one-of-a-kind components and products with Hon Hai group's mounting technology and cost competitiveness.

Sharp plans to enhance this partnership by broadening the collaboration field, to allocate funds received from Hon Hai group by the issuance of new shares through third-party allotment, to the investment for the new technology introduction, to increase mid-and long- term profitability, and to strengthen competitive edge in the global market.

Overview of Strategic Partnership

1. Stabilize LCD panel plant operation in Sakai and strengthen cost competitiveness by purchasing power of Hon Hai Precision Industry

Hon Hai Precision Industry will procure ultimately up to 50% of LCD panels and LCD modules manufactured by SDP. Both companies will mutually take in part of the management through one company set by partner companies, which enables stable operation of the LCD panel plant in Sakai.

The two companies will take advantage of the economy of scale and material procurement in LCD panel and LCD TV fields, and will further enhance cost competitiveness in the global market.

*Share holding rate of SDP:

Current status:

- Sharp: Approx. 93%

- Sony: Approx. 7%

After signing the partnership:

- Sharp: Approx. 46.5%

- Terry Gou and others including investment corporations: Approx. 46.5%

- Sony: Approx. 7%

2. The issuance of new shares to Hon Hai group through third-party allotment

the number of new shares to be issued:121)(the number of new shares to be issued:649)(the number of new shares to be issued:000 shares)

*The issuance of new shares through third-party allotment and share holding rate after the issuance of new shares:

- Hon Hai Precision Industry Co., Ltd.: 4.06%

- Foxconn Technology Co., Ltd.: 0.65%

- Foxconn (FAR EAST) Limited: 2.53%

- Q-Run Holdings Limited: 2.64%