Tue, Apr 07, 2015 - Page 15 News List

Sharp surges on report of LCD spinoff plan

‘DRASTIC REFORM’:The Japanese firm is seeking investment from INCJ to form a subsidiary making LCD panels for smartphones and tablet computers to stem losses

Bloomberg

Sharp Corp rose the most in more than a year in Tokyo yesterday, after a person familiar with the matter said the company plans to ask a government-backed fund for help in spinning off part of its LCD business.

The shares gained 6.1 percent, the most since January last year, to close at ¥245. Osaka-based Sharp is seeking investment from Innovation Network Corp of Japan (INCJ) to form a subsidiary making LCD panels used in smartphones and tablet computers, the person said, asking not to be named as the proposal has not been made public.

Sharp, headed for a third loss in four years, has said it is considering “drastic reform” as the supplier of displays to Apple Inc prepares a management plan for release next month. Talks on investment by Foxconn Technology Group (富士康科技集團) have foundered, and bets against the company’s shares last month rose to the highest level since 2013, as the debt-strapped maker of Aquos TVs considers whether to continue rescue talks with Foxconn.

“If INCJ invests in Sharp, there will be lower possibility of bankruptcy and there will be less investment burden for Sharp,” SBI Asset Management Co chief investment officer Yasuaki Kogure said. “This is huge for Sharp. If you don’t continue investing in the industry, you will be surpassed by others very quickly.”

INCJ is the largest shareholder in Japan Display Inc, which also supplies screens for Apple’s mobile devices. INCJ owns a 36 percent stake after forming the firm from panel operations spun off by Sony Corp, Hitachi Ltd and Toshiba Corp.

Spinning off part of Sharp’s LCD panel business will make it easier to track performance and make faster decisions, the person familiar with the matter said.

The firm will ask INCJ to invest ¥100 billion (US$840 million) in an LCD spinoff, the Nikkei Shimbun reported on Sunday, citing people it did not identify.

The Yomiuri Shimbun on Saturday reported that Sharp aims to shift LCD operations into a separate company.

The government provides most of the funding for INCJ, which also gets support from companies that take smaller stakes in INCJ projects, such as Japan Display.

Sharp is considering various options for its LCD business and has not yet made any decisions, said Yoshifumi Seki, a Tokyo-based spokesman for the company.

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