Sharp announced Monday that it has turned liquid crystal display (LCD) major Sakai Display Products (SDP, Sakai City) into a wholly owned subsidiary for about $296 million.
Sharp previously held a 20% stake in SDP, which produces large display panels for TVs in Sakai City near Osaka. The company acquired the remaining shares from a Samoan investment company in an 11.45-to-1 stock transaction (share swap).
SDP is a manufacturer of large liquid crystal panels used in televisions. Sharp hopes to boost sales in the North American market by buying back SDP, which was transferred during the business crisis.
Sharp took over Sakai Display, a key LCD factory, for nearly $300 million
SDP was once a consolidated subsidiary of Sharp, but was later operated jointly with Taiwan’s Hon Hai Precision Industry Co. and became an equity method company.
At the management briefing after the shareholders’ meeting in June, Sharp’s chief executive officer (CEO) Bo-Hsun Wu said on the role of playing SDP, part of which will be shifted to automotive and computer-oriented products to gain new areas and customers, thus stabilizing performance.
Sharp said the offering diluted Hon Hai Precision’s stake in Sharp to 49.5 percent from 52.6 percent, the first time the company has fallen below the 50 percent mark since it acquired the Japanese electronics maker in 2016.
Whether Hon Hai Precision will continue to be considered Sharp’s parent company will be decided later based on factors such as board composition, Sharp said.
The Sakai plant is said to have started operations in 2009. An asset management company owned by Hon Hai founder Kuo later acquired a majority stake in SDP as Sharp was mired in a financial crisis, and sold those stakes in 2019. Sharp saw the acquisition as an opportunity to start increasing its small- and medium-sized panel production to improve profitability.