Samsung ties up with Sharp
March 6, 2013
South Korea's Samsung was set to buy 10.4 billion yen (85 million euros) worth of new Sharp shares - equivalent to a 3 percent stake in the firm, the Japanese electronics manufacturer Sharp announced Wednesday.
Sharp said in a statement the deal would raise capital for a turnaround plan while boosting mutual trust between the two Asian consumer electronic firms.
Samsung said the investment would lay a firm foundation for Samsung to secure a steady supply of LCD panels from diversified sources. Sharp is a world leader in liquid-crystal display technology for mobile phones and tablet PCs.
However, the Japanese firm is hit by low-cost competition in the sector, and was forced to put up its Osaka headquarters as collateral last year to get crucial bank loans, ensuring its survival.
"For Japan, it is symbolic and shocking news as Sharp is struggling while its rival Samsung has raced past it," Hiroshi Sakai, chief economist with SMBC Friend Research Centre, told the AFP news agency.
Noting that accepting a foreign capital injection would mark a major comedown for Sharp, he said he expected more deals between Japanese firms and their foreign rivals.
Sharp is expecting to close its fiscal year, ending March, with a net loss of 450 billion yen, while its rival Sony has been forced to sell off properties in New York and Tokyo to raise cash. Panasonic, too, is undergoing major cost-cutting and restructuring to stay afloat.
uhe/ipj (AFP, AP, dpa)