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Sharp Corp. is leaning toward spinning off its liquid-crystal display business into a joint venture with a third party, rather than selling the unit outright, people familiar with the matter said.

 

Innovation Network Corp. of Japan and Hon Hai Precision Industry Co. are the two leading candidates Sharp is considering for partnership, according to the people, who asked not to be named because the discussions are private. The Osaka-based supplier to Apple Inc. and the potential partners haven’t entered any talks over price yet, and there’s no guarantee they’ll be able to reach agreement for a joint venture, two of them said.

 

Sharp, which is forecasting its fourth loss in five fiscal years, announced a recovery plan in May, including cutting its workforce by 10 percent and selling preferred shares to banks. President Kozo Takahashi is also selling the company’s headquarters, withdrawing from the TV business in North America and cutting back in solar, while demand growth slumps in its new mainstay of smartphone displays.

 

“The clock is ticking for Sharp,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo. “It has to talk with as many potential partners as possible.”

 

If Innovation Network, also known as INCJ, injects capital into the joint venture, it may combine the business with Japan Display Inc., a competitor the Japanese state-backed fund already supports, according to two of the people. There could be antitrust concerns in combining two operations.

 

Sharp fell 2.8 percent to 172 yen in Tokyo, widening its decline for the year to 36 percent.

 

Sharp had sought an investment from Taiwan-based Foxconn Technology Group’s Hon Hai in 2012, but talks foundered over disagreements on price and the Taipei-based company’s possible role.

 

A Sharp spokesman, Yoshifumi Seki, said the company is considering various options to restructure its LCD business and hasn’t entered negotiations with any specific company. Louis Woo, a spokesman for Foxconn, declined to comment. INCJ declined to comment.

 

http://www.bloomberg.com/news/...ure-rather-than-sale

 

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