Samsung buys equity stake in Sharp

South Korea's Samsung Electronics Co. Ltd. on Wednesday, March 6, became the second customer to buy into Sharp Corp. after a partnership agreement between the struggling Japanese electronics maker and an Apple Inc. supplier faltered.

Samsung will pay ¥10.4 billion ($111.5 million) for new shares equivalent to a 3.08% stake and begin to buy more displays for its televisions and notebooks from Sharp.

Sharp has since September been relying on a ¥180 billion emergency loan from lenders Mizuho Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. The company failed to adjust to a slowing TV market and was hit by decreased demand for parts it makes for Apple's iPhone. The company in November warned it may crumble and has been seeking partners to raise cash.

It expects a ¥450 billion loss in the year ending March 31 but was able to stem some of the hemorrhage in the fiscal third quarter and lost just ¥36.7 million, after a ¥147 million loss in the year-earlier period.

A planned rescue by Hon Hai Precision Industry Co. Ltd. fell through when Sharp in August agreed to release the company from the investment agreement after its own performance deteriorated. Hon Hai, which is better known as Foxconn and which makes Apple's iPhone, had offered to buy 9.9% of Sharp at ¥550 per share. Foxconn theoretically has until March 26 to consummate the agreement but the two have yet to finalize their contract and Foxconn founder and chairman Terry Gou has shown no interest in the deal. Foxconn earlier bought Sharp's liquid crystal display unit for ¥66 billion -- and may yet buy more of Sharp's foreign display manufacturing activities.

San Diego software maker Qualcomm Inc. last year spent ¥4.9 billion on Sharp shares. The investment, which underpinned a cooperation on low-power displays, will equate to a 2.61% stake in Sharp once the Samsung shares are issued. Under the terms of the December agreement Qualcomm may invest an additional ¥5 billion in Sharp if its performance improves in the second half of the current fiscal year.

The cash infusion pushed Sharp's shares up 14.1%, or ¥42, to ¥341 in Tokyo Wednesday.