|Samsung pours US$111m into troubled Sharp
Sharp announced a US$111 million capital injection deal with South Korean rival Samsung, in a rare move for a Japanese company that underscores the fading fortunes of its electronics giants.
Sharp, which is scrambling to repair its battered balance sheet, said Samsung would buy 10.4 billion yen worth of new shares, or a 3 percent stake in the Japanese electronics giant. That would make the smartphone and tablet maker Sharp's biggest foreign shareholder, reports said.
Reports of the deal sent Sharp shares soaring more than 17 percent in early trade before ending 14.04 percent higher. Samsung was 0.65 percent higher. The pact was announced after the Tokyo and Seoul markets had closed.
Sharp aid the deal would help shore up its troubled finances while boosting “mutual trust'' between the firms as they look to benefit from Sharp's leading liquid-crystal display technology for mobile phones and tablets.
Samsung said the investment “would lay a firm foundation for Samsung to secure a steady supply of LCD panels from diversified sources''.
The decision to accept a capital injection from a foreign firm would mark a major comedown for both the company and Japan's manufacturers, said Hiroshi Sakai, chief economist with SMBC Friend Research Center.
“For Japan, it is symbolic and shocking news as Sharp, which used to be a frontrunner in the panel industry, is struggling while its rival Samsung has raced past it,'' he said.
The deal would not solve all of Sharp's woes, he added, as the company cuts jobs and overhauls its business after saying in February its loss in the nine months to December had doubled to about US$4.6 billion.
The Samsung-Sharp deal gives the South Korean company more access to the market without investing in new production plants, analysts said.