OSAKA Sharp has turned its LCD factory operator Sakai Display Products into a wholly owned subsidiary for an estimated 40 billion yen $296 million, according to a deal announced Monday.
Sharp previously held a 20% stake in SDP, which produces large display panels for televisions in the city of Sakai near Osaka. It acquired the rest from a Samoa-based investment company through a 1 for 11.45 stock exchange.
The deal is about 38.45 million shares issued by Sharp, equivalent to 6% of its outstanding shares, or 40 billion yen, based on Monday's closing price. This issuance has diluted Hon Hai Precision Industry's stake in Sharp to 49.5% from 52.6%, according to Sharp - its first time falling below the 50% mark since acquiring the Japanese electronics maker in 2016.
Whether Hon Hai, also known as Foxconn, will be considered Sharp's parent company will be decided later, based on factors including the board's composition, Sharp said. Sharp President and CEO Wu Po-hsuan was sent from Hon Hai to the company.
The Sakai plant was operational in 2009. A Hon Hai founder Terry Gou later acquired a majority of SDP in the face of Sharp's financial crisis and had sold the stake by the year 2019.
Sharp sees the acquisition as an opportunity to increase production of small and midsize panels in order to improve profitability.