Sharp Corp. announced Tuesday it will acquire Toshiba Corp.’s once-signature personal computer business in a bid to make a comeback in the PC market.
Sharp, controlled by Hon Hai Precision Industry Co., will pay ¥4 billion for an 80.1 percent stake in Toshiba Client Solutions Co., a PC-related subsidiary of Toshiba that once held the biggest share of the global laptop market but has since lost out to overseas rivals. The stock transfer is planned for Oct. 1.
Sharp also announced it will issue new shares worth up to ¥200 billion to buy back preferred shares from banks, seeking to quickly improve its financial status.
Sharp aims to turn Toshiba’s money-losing business into a new profit-driver by exploiting its liquid crystal display production and the manufacturing know-how of parent Hon Hai. Sharp said it plans to keep using Toshiba’s Dynabook PC brand name.
Toshiba is letting go of its suffering computer business as part of a portfolio-restructuring effort after facing a fiasco involving its U.S. nuclear unit, Westinghouse Electric Co., last year.
“Sharp will take advantage of Hon Hai’s manufacturing capability to strengthen its hardware products as a cash-cow business,” said Takao Matsuzaka, a credit analyst at Daiwa Securities Co.
He added that Sharp’s TV and smartphone segments have improved by teaming up with Hon Hai, a Taiwan-based manufacturing giant famous for iPhone assembly.
On top of Hon Hai’s manufacturing expertise, Sharp produces LCD panels, which can be used for computers. Thus, there is a good chance that Sharp can provide cost-competitive computers and turn the business into profit source, Matsuzaka said.
According to a document released by Toshiba, its computer business logged a ¥8.2 billion net loss in the business year that ended in March after seeing a ¥1.7 billion net loss the previous year.
According to Euromonitor International, a London-based research firm, Toshiba was ranked eighth in terms of global laptop share in 2017 with 1.92 percent.
As it struggled to recover from a money-losing spiral, Sharp was purchased by Hon Hai in 2016. Since then, the Osaka-based firm has improved its financial health.
In the business year that ended in March, Sharp posted a net profit every quarter for the first time in 10 years.
While Toshiba Client Solutions’ main business is computers, it also develops wearable devices and technologies related to the “internet of things.”
Sharp is aiming to strengthen its electronics business by incorporating artificial intelligence and the internet of things into more of its products, such as home appliances.
Thus, Sharp may be interested in Toshiba Client Solutions-related technologies, said Matsuzaka.
Sharp has been led by Chief Executive Officer Tai Jeng-wu, who came from Hon Hai. Tai has expressed a willingness to re-enter some electronics businesses from which Sharp had withdrawn. The company exited the computer business in 2010.