Sharp set to spin off LCD unit in deal with Japan Display


Sharp Corp. is closer to spinning off its struggling liquid crystal display business and integrating the unit into rival Japan Display Inc. in a state-backed deal, sources said Tuesday.

Main lenders for the electronics maker have entered final talks with public-private fund Innovation Network Corporation of Japan for the potential transaction, the sources said.

INCJ owns nearly 36 percent of Japan Display, which was formed in a government-backed deal in 2012 from the ailing display units of Sony Corp., Toshiba Corp. and Hitachi Ltd.

The deal for Sharp could be reached early next year between INCJ, Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ, the sources said.

Sharp was rescued in May in a ¥225 billion ($1.8 billion) bailout from banks following a slump in the LCD business, leading to further turnaround efforts, including job cuts and the sale of its head office building, amid pressure from lenders frustrated with the firm’s slow progress in improving its earnings.

Both Sharp and Japan Display, suppliers for Apple Inc.’s iPhones, have faced intense price competition from Asian rivals.

Integrating the LCD operations is expected to help maintain their competitive edge and also prevent Sharp’s advanced technology for energy-saving displays from being acquired by foreign firms.

The lenders for Sharp will consider extending new loans to the integrated entity to support its launch, the sources said.

The main lenders will also consider spinning off Sharp’s loss-making white goods business, which makes refrigerators and washing machines among others, to integrate it with that of Toshiba, which has been under pressure to restructure amid a massive accounting scandal that hit the firm.

Toshiba President Masashi Muromachi said Monday the electronics and infrastructure conglomerate is studying such integration with Sharp as one of its options.