Japan Display closer to takeover of Sharp LCD

The spin off of Sharp's LCD business and its merger with Japan Display may hinge on the waiving of Sharp's debts by creditors.

Japan Display is closer to a decision regarding the takeover decision Sharp's ailing Liquid Crystal Display (LCD) business, according to report on Tuesday by the Mainichi newspaper.

If Sharp agrees to spin off its LCD business from the rest of the corporation and merge it with Japan Display it would create the world's largest maker of small- and mid-sized LCD panels with a global market share of over 30 percent, nearly twice as large as LG Display with a global market share of 17 percent, Mainichi reported.

The merger and acquisition appears to hinge on a proposed deal to waive debt owed by Sharp to a coterie of Japanese investors, including Mizuho Bank and the Bank of Tokyo-Mitsubishi UFJ.

Innovation Network Corporation of Japan, created in 2009 by public and private sector groups to enhance the competitiveness of Japanese industries, urged creditors to agree to an investment-for-debt-waiver proposal in order to smooth the way for Japan Display to acquire.

That might prove difficult, as Sharp has been extended a bailout twice over the last two years without much improvement in the company's bottom line to show for it. Sharp's second quarter operating profit for this year tumbled 86 percent year over year to 3.5 billion yen ($28.4 million) as it struggled with pricing pressure, showing little improvement since a $1.9 billion bailout in May. Its LCD division reported an operating loss of 12.7 billion yen ($103.3 million) in the quarter.

For its part, Japan Display is interested in acquiring key display technology patents owned by Sharp.

Japan Display Chairman and CEO Mitsuru Homma told reporters in Japan in November that he saw a threat in any deal that would result in Sharp's technology "going to a third country," addressing speculation Sharp could merge with archrival Hon Hai Precision Industries of Taiwan.

Source: ZDNet.co.kr