Madison, Wis.--Troubled Japanese electronics manufacturer Sharp Corp. is expected to accept a 10 billion yen ($107 million) investment from South Korea's Samsung Electronics Co. Ltd., according to Nikkei, Japan’s economic newspaper. While both companies are keeping mum, Nikkei reported that the official announcement is expected as early as Wednesday (March 6).
The investment will reportedly give Samsung a roughly 3 percent stake in Sharp. It makes the South Korean giant "Sharp’s fifth largest shareholder," and “the largest that is not a financial institution,” Nikkei reported.
A partnership between the Japanese LCD company and its rival South Korean giant is somewhat unexpected, but the move will be critical for the ailing Sharp to improve its financial health and boost supplies of television and smartphone LCD panels to Samsung.
Nikkei reported that Sharp, in fact, has been already supplying LCD panels for 32-inch TVs to Samsung from its Kameyama fab. The new financial deal with Samsung could also help Sharp to increase the utilization of its Kameyama fab, speculated Nikkei, since Sharp has seen its Kameyama fab’s capacity utilization sinking under 50 percent as a result of Apple’s decision to reduce output of the iPhone 5.
It remains unclear how the Samsung-Sharp deal affects or substitutes the yet-to-be-consummated Hon Hai-Sharp deal originally struck a year earlier.
Hon Hai agreed last March to acquire a 9.9 percent stake in Sharp for 550 yen a share, providing the Japanese company with 66.9 billion yen. As the companies renegotiated the deal, Sharp's share price fell to a 38-year low in mid-August to 164 yen. Talks stalled after top executives from both companies met in Osaka at the end of August last year.
The two companies, to date, have been unable to come up with a reworked deal, while its deadline for the deal, set on March 26, is only a few weeks away.