It shouldn’t be news to anyone whose followed Sony the past few years that their television division has been troubled. With 8 consecutive years of losses, Sony in the last year has begun reassessing their stake in LCD production which lead the company to sell their stake in S-LCD production back to Samsung. Without the headaches of small LCD production, Sony was left with their joint venture with Sharp who they developed and created larger LCD screens, fitted for televisions. In late March, news broke that even that co-operation between the two companies was beginning to breakdown as Sharp was even in a worse financial condition than Sony. Now, we have confirmation that Sony had ended the join venture between the two companies. Details, after the jump.

As of today, Sony has officially ended its connection to Sharp Display Products Corp. by withdrawing their 7 percent stake in the company. Thanks to the original agreement, Sony is able to not only end the join venture between the two companies, but also take back the 10 billion yen ($126 million) it originally invested. Sony stated that the reason the partnership has come to an end is due to the:

 “rapidly changing market for LCD panels and LCD televisions,” 

Sony who no longer possesses any LCD manufacturing plants or partners, plans to to buy panels from companies like Sharp and Samsung, rather than invest in manufacturing them. Sony believes that without the headache and cost of producing panels, the company can get better prices on the market. Sony plans to use its internal imaging and video engines as a way to differentiate its televisions from competitors.

Discuss:

Is it wise for Sony to go at it alone?

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Sharp and Sony to terminate joint venture to produce and sell large-sized LCD panels and modules

Sharp Corporation (“Sharp”) and Sony Corporation (“Sony”) today announced that their joint venture relationship to produce and sell large-sized LCD panels and modules will terminate, and that Sony will sell its shares (representing 7.04% of the issued shares) in Sharp Display Products Corporation (“SDP”) to SDP*. In consideration for the sale of shares, Sony will receive cash consideration equal to its original investment of 10 billion yen to be paid by SDP*. Both the sale of shares and the payment of cash consideration will be completed by the end of June 2012.

On July 1, 2009, Sharp transferred its LCD panel plant in Sakai City, Osaka Prefecture, to SDP, a wholly-owned subsidiary of Sharp. On December 29, 2009, Sony invested 10 billion yen into SDP in exchange for new shares issued by SDP to Sony (representing 7.04% of the issued shares of SDP) and, as a result, SDP became a joint venture company of Sharp and Sony as of the same date. In light of the rapidly changing market for LCD panels and LCD televisions, in March 2012 Sharp and Sony agreed to amend the original joint venture agreement to provide that Sony would not make additional capital injections in SDP. Based on this amendment, the companies agreed to study studied the future direction of the joint venture and other potential business relationships between the parties, including with respect to Sony’s interest in SDP.

* In the event SDP is not able to purchase or pay for those shares due to applicable legal restrictions on acquiring its own shares or for any other reason, Sharp will purchase those shares from Sony.
Impact on the consolidated financial information of Sharp, as the parent company of SDP
No material impact is anticipated on Sharp’s consolidated financial forecasts for the fiscal year ending March 31, 2013.
Impact on the consolidated financial information of Sony

No material impact is anticipated on Sony’s consolidated financial forecasts for the fiscal year ending March 31, 2013.

Sharp Display Products Corporation

Representative:
Hiroshi Saji, President
Location:
1 Takumi-cho, Sakai-ku, Sakai City, Osaka Prefecture
Principal Business:
Production and sales of large-sized LCD panels and modules
Date of Establishment:
April 1, 2009 (as a wholly-owned subsidiary of Sharp)
Joint Venture

Establishment Date:
December 29, 2009
Share Holding Ratio:
Sharp 92.96%, Sony 7.04% (as of end of April, 2012)

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