Reuters: Mergers News: UPDATE 2-Sharp issues $808 mln in shares to Taiwan's Hon Hai

Reuters: Mergers News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 2-Sharp issues $808 mln in shares to Taiwan's Hon Hai Mar 27th 2012, 09:24 Tue Mar 27, 2012 5:24am EDT * Sharp to issue shares worth 66.9 bln yen to Hon Hai group * Hon Hai to be Sharp's top shareholder with about 11 pct * Sharp to sell 46.48 pct stake in Sakai plant to Hon Hai * Under-used Sakai factory weighing on Sharp profits TOKYO, March 27 (Reuters) - Sharp Corp will issue shares worth $808 million to Taiwan's Hon Hai Precision Industry as part of a tie-up in liquid crystal display production aimed at reversing losses at the Japanese firm from falling TV sales. The issue of 66.9 billion yen ($808 million) worth of shares will give Hon Hai, the main manufacturer of Apple devices, around an 11 percent stake in Sharp, making it the top shareholder in Japan's biggest LCD maker. Together with Sony Corp and Panasonic Corp , Japan's three main TV makers expect to lose $17 billion this year, savaged by competition from foreign rivals led by South Korea's Samsung Electronics. Slumping television demand has forced Sharp to slash output at its main plant in Sakai, western Japan, which is working at half its capacity. Losses from the plant, in turn, pushed Osaka-based Sharp deep into the red in the last quarter, erasing about 180 billion yen in equity. At end-December, Sharp's net debt-to-equity ratio was 1.03, six times the industry average and the highest among Japan's electronics firms, Thomson Reuters data shows. "The electronics market is becoming severe, with rapid price declines due to the development of digital technology and increased competition in a global market," Sharp said. "We believe the timely action is necessary to tackle these changes." The company said it would issue new shares to four Hon Hai group firms, and sell a 46.48 percent stake in the Sakai plant to Hon Hai, raising 66 billion yen from the sale. Hon Hai will also buy up to 50 percent of the LCD panels produced at the Sakai plant, Sharp said in a statement. "The deal is positive for Sharp as the loss-making company can now use the cash for investment," said HSBC analyst Jenny Lai in Taipei. "But it's hard to say whether the transaction is good value as we don't know the asset value of the loss-making plant. Usually LCD companies are hugely discounted. But the investment can help Hon Hai leverage Sharp's IPS technology, which is used in iPad and iPhone panels." Sharp has projected a record 290 billion yen ($3.5 billion)net loss in the year ending March 31 as it struggles with a slump in LCD demand. It has trimmed its forecast for LCD TV sales to 12.8 million from a previous 13.5 million. Sales of LCD TVs almost halved in October-December, and only sales of TV models with screens of 60 inches or bigger in the United States remained robust. Link this Share this Digg this Email Reprints

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