Thursday, March 28, 2024 | Ramadan 17, 1445 H
broken clouds
weather
OMAN
23°C / 23°C
EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Sharp to buy Toshiba PC business, issue $1.8 billion in new shares

1356756
1356756
minus
plus

TOKYO: Japan’s Sharp Corp said it will buy Toshiba Corp’s personal computer business and issue $1.8 billion in new shares to buy back preferred stock from banks, highlighting a swift recovery under the control of Foxconn.


The acquisition of the PC business for $36 million marks a return by Sharp to a market it quit eight years ago, even if its comparatively low cost underscores dwindling demand in a world where many consumers spend more money on their smartphones.


The Osaka-based electronics maker will be able to use the scale of parent Foxconn, the world’s biggest contract manufacturer, to produce PCs more cheaply - just as it has done with TVs.


“Foxconn is a PC contract manufacturer and has a great deal of expertise and production capacity,” said Hiromi Yamaguchi, senior analyst at Euromonitor International.


“This acquisition will prove a further catalyst for more Sharp and Foxconn synergies.”


Sharp said it will take an 80.1 per cent stake in Toshiba’s PC unit on October 1, and will retain its Dynabook brand.


Toshiba, which launched the world’s first laptop PC in 1985, sold 17.7 million PCs at its peak seven years ago.


That has shrunk to just 1.4 million units last year.


Bought by Foxconn, known formally as Hon Hai Precision Industry Co Ltd, two years ago, Sharp recently posted its first annual net profit in four years, helped in large part by cost cuts but also by Foxconn’s sales network in China.


Sharp said it was buying back the preferred shares, which were issued to banks in a return for a financial bailout, to reduce high interest payments.


Although the new issue will result in dilution of more than 10 per cent, it is not expected to be as great as any potential dilution that could have resulted had the preferred shares been converted into regular stock.


Shares in Sharp pared steep losses after the share issue news to close 4 per cent lower, giving it a market value of around $12.8 billion.


Sharp was once known as a major supplier of high-end TVs and smartphone displays but struggled to compete with Asian rivals before it was bought by Foxconn.


It is now seeking to get back the license of the Sharp brand for TVs in North America it previously sold to China’s Hisense Group.


Embattled conglomerate Toshiba sold its television business to Hisense and its white-goods business to China’s Midea Group as it scrambled for funds to cover billions of dollars in liabilities arising from now-bankrupt US nuclear unit Westinghouse.


The $18 billion sale of its chips business to a group led by US private equity firm Bain Capital was completed last week.


Toshiba outsourced PC production until 2015, and currently builds PCs at its own plant in China. — Reuters


SHARE ARTICLE
arrow up
home icon