TOKYO: Shares in Sharp surged 15.15 percent on Wednesday after the Japanese electronics giant announced an $808 million deal with Taiwan's Hon Hai Precision.
Sharp remained bid-only and limit-up at 570 yen throughout Wednesday's trading on the Tokyo Stock Exchange after the firm announced plans for a capital injection late Tuesday that will make Hon Hai its biggest shareholder.
Under the deal Sharp will sell 121 million new shares worth 66.9 billion yen to Hon Hai, which will also take half of its 93.0 percent interest in a huge LCD plant in Sakai, western Japan.
Hon Hai, parent company of manufacturing giant Foxconn which builds gadgets for Apple, will own about 10.0 percent of Sharp shares after the sale.
The Taiwanese firm will buy about half the panels produced at the loss-making factory in Sakai, Sharp said, in a partnership aimed at creating stable demand for the panels, which are used in televisions.
"The agreement to take on 50 percent of the LCD panel output at Sakai removes the risk of low capacity utilisation, while the write-down risk for undepreciated assets at Sakai is also removed," noted Morgan Stanley MUFG analysts in a client report.
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