Sharp Surges as Company Seeks Support for Spinoff

Sharp Corp. rose the most in more than a year in Tokyo after a person familiar with the matter said the company plans to ask a government-backed fund for help in spinning off part of its liquid-crystal display business.

The shares gained 6.1 percent, the most since January 2014, to close at 245 yen. Osaka-based Sharp is seeking investment from Innovation Network Corp. of Japan to form a subsidiary making LCD panels used in smartphones and tablet computers, the person said, asking not to be named as the proposal hasn’t been made public.

Sharp, headed for a third loss in four years, has said it’s considering “drastic reform” as the supplier of displays to Apple Inc. prepares a management plan for release in May. Talks on investment by Foxconn Technology Group have foundered, and bets against the company’s shares rose to the highest level since 2013 last month as the debt-strapped maker of Aquos TVs considers whether to continue rescue talks with Foxconn.

“If INCJ invests in Sharp, there will be lower possibility of bankruptcy and there will be less investment burden for Sharp,” said Yasuaki Kogure, chief investment officer at SBI Asset Management Co. in Tokyo. “This is huge for Sharp. If you don’t continue investing in the industry, you will be surpassed by others very quickly.”

Innovation Network, also known as INCJ, is the largest shareholder in Japan Display Inc., which also supplies screens for Apple’s mobile devices. INCJ owns a 36 percent stake after forming the company from panel operations spun off by Sony Corp., Hitachi Ltd. and Toshiba Corp.

Government Funding

Spinning off part of Sharp’s LCD panel business will make it easier to track performance and make faster decisions, the person familiar with the matter said.

The company will ask INCJ to invest 100 billion yen ($840 million) in an LCD spinoff, the Nikkei newspaper reported Sunday, citing people it didn’t identify. The Yomiuri newspaper on Saturday reported Sharp aims to shift LCD operations into a separate company.

The government provides most of the funding for INCJ, which also gets support from companies, which take smaller stakes in INCJ projects such as Japan Display.

Sharp is considering various options for its LCD business and hasn’t yet made any decisions, said Yoshifumi Seki, a Tokyo-based spokesman for the company.

An INCJ spokesman declined to comment.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE