Japan state-fund mulls picking stake in Sharp Corp

By Money Times

Dec 03, 2015 02:25 AM EST

Innovation Network Corporation of Japan (INCJ) is mulling over acquiring a majority stake in Sharp Corp. INCJ is a Japanese government-backed fund and is planning to buy the stake for Yen 200 billion ($1.63 billion).

The basic aid plan is expected to be finalized during the current financial year ending March 2016. Sharp registered Yen 50 billion operating loss during the first half of 2015 on account of loss-making LCD business unit.

As part of its restructuring exercise, Innovation Network Corporation of Japan is favoring the plan to pick stake in Sharp Corp for Yen 200 billion ($1.63 billion).

After the news about possible stake buying by INCJ broke out in the market, Sharp's stock rose 11 percent in intraday trading. 

Sharp Corp is planning to spin off its loss-making liquid crystal display (LCD) unit.

As per reports by Reuters, Sharp may agree for stake offloading after the spinning off the loss-making LCD business unit. A spokesperson at INCJ declined to comment on the latest development.

Japan in 2009 launched INCJ with an objective of making technology sector more competitive. INCJ is exploring all the possible ways to invest in Sharp Corp and it said to have asked the top officials at the electronic company to swap some of its debt in exchange for investment.

INCJ is planning for a brokering a merger or partnership with Japan Display Inc. INCJ has 35 percent stake in Japan Display Inc.

Yomiuri newspapers further opined that INCJ may seek the resignation of Sharp chief executive and president Kozo Takahashi and other senior officials. 

The stake selling is expected to propel Sharp Corp to make a turnaround. Sharp's LCD unit suffered from Yen 50 billion operating loss during the first half of 2015. Owing to the ongoing economic slowdown in China, the LCD unit incurred loss more than expected.

The Japanese government is keen on Sharp's technology and it doesn't want it to be handed over to an overseas company in the form of stake offloading.

Earlier, Taiwan-based Hon Hai Precision Industry Co (Foxconn) expressed its interest in picking stake in Sharp. But, the Japan's Ministry of Economy, Trade and Industry has turned against this proposal. The ministry has jurisdiction over INCJ. 

By acquiring a stake in Sharp, INCJ is expected to lead the restructuring exercise at Sharp Corp. The Osaka-based electronic major is a supplier to Apple as well. The slump in LCD panel business gave a major blow to LCD unit of Sharp, which also makes high -end televisions and other electronics products.

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