Sony, Hitachi, Toshiba to merge display businesses

Sony, Hitachi, and Toshiba have agreed to merge their small and medium-size display businesses into a joint venture, that will have a government-backed investment company, Innovation Network Corporation of Japan, as the largest shareholder.

The move comes as Japan tries to protect its companies from the rising Yen and competition from other Asian players.

INCJ, Hitachi, Sony, and Toshiba said on Wednesday that they have signed a non-binding Memorandum of Understanding to integrate their display businesses, currently operated by subsidiaries, in a new company to be established and operated by INCJ. The display companies make LCDs (liquid crystal displays) including ones using TFT (thin-film transistor) technology that are used in computing devices and television sets. 

All of the issued shares of subsidiaries Hitachi Displays, Sony Mobile Display and Toshiba Mobile Display and other assets are to be transferred to the new company which is to be called Japan Display. INCJ, which provides financial, technological, and management support for next-generation businesses, plans to invest ¥200 billion (US$2.6 billion) in the joint venture in exchange for shares to be newly issued by it as a third-party allotment, the companies said.

INCJ expects to hold 70 percent of Japan Display, with Sony, Hitachi and Toshiba each holding a 10 percent stake. 

The new company will set up new production lines for high-value products, and invest in research and development, including in the area of higher resolution and thinner organic light-emitting diode (OLED) displays.

INCJ, Hitachi, Sony and Toshiba are aiming to sign definitive and legally-binding agreements in the autumn of 2011 and to complete the business integration in the spring of 2012, subject to the receipt of any necessary government approvals, the companies said. Japan Display is expected to go for an initial public offering in 2016, according to reports.

Set up in 2009, INCJ is capitalized at ¥92 billion, with the Japanese government injecting ¥82 billion and 19 private corporations providing a further ¥10 billion, according to its Web site.

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