Samsung will own three percent of Sharp in exchange for a large investment.
Japan Times reports that Samsung will provide Sharp with a ¥10.4 billion ($108.2 million/€83.2 million) investment as well receive a “stable supply of large LCD panels”, giving Sharp a “needed cash lifeline” and production boost. In return, Sharp will sell three percent of its shares to Samsung, making Samsung the largest foreign shareholder and the fifth-largest of all shareholders.
The deal will reportedly “put to rest” concerns over Sharp’s financial stability, with a potential deal with Foxconn stalling in recent weeks, and Sharp’s stocks finished 14.05 percent higher on the Tokyo Stock Exchange as a result of the announcement.
Japan Times noted that Sharp currently provides Samsung with LCD panels for TVs and mobile devices, and had “aggressively invested” in such technology “only to see demand weaken and prices plummet” due to competition. Such competition included Samsung, and so the deal now allows for a possibility of a “boon [in] LCD production for Sharp’s LCD plant in Japan.
Sharp added in a statement concerning the deal: “This capital alliance will enable Sharp to secure its source of revenue from [the] LCD business forming the company’s core. Sharp will certainly position its business for growth by continuously accelerating implementation of its business restructuring to realise a ‘recovery of business performance and credibility’. ”