Sony Corporation ("Sony") and Samsung Electronics Co., Ltd. ("Samsung") today announced that the two companies have signed agreements to transition the current business relationship with respect to LCD panels.
Under the agreement, Samsung will acquire all of Sony's shares of S-LCD Corporation ("S-LCD"), the two companies' LCD panel manufacturing joint venture, making S-LCD a wholly owned subsidiary of Samsung. In consideration for the share transfer, cash consideration of approximately KRW 1.08 trillion* will be paid to Sony by Samsung. Concurrently, the two companies have entered into a new strategic agreement for the supply and purchase of LCD panels with a goal of enhancing the competitiveness of both companies. The agreement also allows Sony and Samsung to continue cooperative engineering efforts focused on LCD panel technology.
For Sony, this transaction will enable it to monetize its shares in S-LCD and aims to secure a flexible and steady supply of LCD panels from Samsung, based on market prices and without the responsibility and costs of operating a manufacturing facility. With whole ownership of S-LCD, Samsung anticipates heightened flexibility, speed and efficiency in both panel production and business operations.
Established in April 2004, S-LCD has continued to deliver advanced and cost-competitive LCD panels to both of its parent companies, contributing to the expansion of the respective parties' TV businesses, and the large-sized LCD TV market overall. However, LCD panel and TV market conditions have now changed. In order to respond to such challenging conditions and to strengthen their respective market competitiveness, the two companies have agreed to shift to a new LCD panel business alliance.
The share transfer and payment are targeted to close by the end of January 2012, subject to necessary approvals from regulatory authorities.
As a result of this transaction, a non-cash impairment loss of approximately JPY 66 billion is expected to be incurred by Sony in the third quarter of the fiscal year ending March 31, 2012, due to the reevaluation of its S-LCD shares. This loss includes an impact from the fluctuation of exchange rate. Despite this one-time loss, Sony estimates that the transaction will result in substantial savings on and after January 1, 2012 in respect of costs associated with its procurement of LCD panels. The current estimate of the yearly savings in respect of such costs is approximately JPY 50 billion, compared to LCD panel procurement costs estimated for the fiscal year ending March 31, 2012. Neither the one-time loss nor the estimated cost savings were included in Sony's forecast of consolidated financial results for the current fiscal year ending March 31, 2012, announced on November 2, 2011. Sony is currently reevaluating this forecast, taking into account this transaction and other factors that might affect its full year FY2011 consolidated financial results forecast.
Facts about S-LCD
Established: April 26, 2004
Capital: KRW 3.3 Trillion
(Samsung Electronics: 50% plus 1 share, Sony: 50% minus 1 share)
Representative: Donggun Park, CEO
Location: Tangjeong, Chung Cheong Nam-Do, South Korea
Production Items: 7th and 8th generation Amorphous TFT LCD
The final amount of such payment will be determined based on S-LCD's financial statements as of the end of December 2011.
Latest News Posts
- VR On The Lot event in Hollywood includes X-Men director
- Divinity Original Sin 2 hits early access next month
- Tesla's new P100D announced, 0-60mph in 2.5 seconds
- Apple rumored to unveil curved iPhone in 2018
- HoloLens powered by 24-core holographic processing unit
- Z77x-D3h issue with windows 10 fast start up feature
- MSI GeForce GTX 1060 Gaming X 6G Graphics Card Review
- asrock z97 extreme4 issue
- ASUSTOR AS6208T Eight-Bay SMB NAS Review
- GA-Z170X-Ultra Gaming and Intel 750 400GB SSD on the U.2 port, high CPU usage in windows at idle.
- CAPE Audio shakes up the headphone industry with the release of Rebellion Headphones
- Tesoro announces ambidextrous, White Sharur SE Spectrum gaming mouse
- Eurocom launches worlds first GTX 1080 SLI VR-Ready laptop
- Thermaltake new Pacific RGB G1/4 PETG Tube 16mm OD 12mm ID 6 liquid-cooling fittings with 1 RGB LED lighting controller
- Cooler Master announces the MasterMouse Pro L