Sharp Corporation has agreed with NEC Corporation to acquire 66% of the shares of NEC Display Solutions Ltd, a subsidiary of NEC, to become a subsidiary of Sharp and to be jointly operated with NEC as a joint venture.

NDS is in charge of BtoB display business within the NEC Group, with LCD display, professional projector, digital cinema products and solutions at its core development worldwide. Meanwhile, Sharp develops its BtoB display business with LCD display, electric whiteboard, professional projector, and 8K related equipment in the Japanese market.

NDS holds strengths in the global market centering in Europe and North America, while Sharp has its strengths in the Japanese market, making both parties mutually complementary, and various synergy effects can be expected by establishing a joint venture, such as scale merit, cross-selling of products, and business expansion in new categories such as LED display and 8K+5G Ecosystems with mutual cooperation.

Sharp views that making NDS its subsidiary and also a joint venture with the NEC Group will contribute to Sharp’s business growth by enforcing its BtoB business and expanding sales etc., and decided to acquire a majority of NDS shares.

Sixty-six % of NDS shares will be transferred from NEC to Sharp. The shares currently partially owned by NEC Networks & System Integration Corporation are scheduled to be transferred to NEC prior to the share transfer to Sharp, and NEC will hold all shares of NDS at that time.

With the above, NDS will become Sharp’s subsidiary as Sharp will hold 660/o of its shares. NEC will continue to hold 340/o of its shares to make NDS a joint venture between Sharp and NEC. Also, the following four subsidiaries of NDS will become Sharp’s subsidiaries with the above transfer of NDS becoming Sharp’s subsidiary:

  1. NEC Display Solutions of America, Inc.
  2. NEC Display Solutions Europe GmbH
  3. NEC Viewtechnology Trading (Shenzhen), Ltd.
  4. S[quadrat] GmbH

3.   Overview of NDS

1. NameNEC Display Solutions Ltd.
2. LocationMita Kokusai Building, 4-28, Mita 1-chome, Minato-ku, Tokyo, Japan
3. Job title and name of representativeHisatsugu Nakatani, President
4. Business descriptionDevelopment, manufacturing, and sales of visual display products and visual display solutions
5. Capitalization3.0 billion yen
6. Date establishedJanuary 18, 2000
7. End of fiscal yearMarch
8. Major shareholder and shareholdingratioNEC 99.9%, NEC Networks & SystemIntegration Corporation 0.1 0/o
9. Relationship between the company inquestion and the listed companyThere is no applicable relationship in capital, personnel, and business between Sharp and its subsidiaries with NDS and its subsidiaries.
10. Operating results and financial condition of the company during the last three years
Fiscal yearEnded March 2017Ended March 2018Ended March 2019
Net assets (equity)4,930 million yen7,553 million yen5,756 million yen
Total assets34,7s3 million yen39,952 million yen33,521 million yen
Net assets per share160,064 yen245,227 yen186,883 yen
Net saless9,0T9 million yen72,005 million yen63,258 million yen
Operating income897 million yen2,492 million yen(251 million yen)
Recurring profit980 million yen3,226 million yen653 million yen
Net incomeT24 million yen2,849 million yen(317 million yen)
Net income pershare23,506 yen92,500 yen(10,292 yen)
Dividend per share2,T50 yen9,030 yen46,200 yen

* Ended March 2019 net sales: 9T,370 million yen, operating income: 930 million yen (IFRS base). Surplus is maintained even on a non-consolidated base after excluding structural reform costs and initial investments toward new businesses.

4.   Overview of Counterparty to Share Acquisition Agreement (as of March 31, 2019)

1. NameNEC Corporation
2. Location7-1, Shiba 5-chome, Minato-ku, Tokyo,Japan
3. Job title and name of representativeTakashi Niino, President & CEO
4. Business descriptionPublic Business, Enterprise Business,Network Services Business, SystemPlatform Business, Global Business
5. Capitalization39T.2 billion yen
6. Date establishedJuly 17, 1899
7. Consolidated net assets1,060.3 billion yen
8. Consolidated total assets2,950.6 billion yen
9. Major shareholders and shareholdingratiosThe Master Trust Bank of Japan, Ltd.(Trust Account) 7.28%Japan Trustee Services Bank, Ltd. (TrustAccount) 6.04% 
 FUNDS) 3.45% 
10. Relationship between the listed company and the company in question 
Capital relationshipNot applicable 
Personnel relationshipNot applicable 
Business relationshipBusiness relationships exist with the company, such as product sales. 
Applicable situation to related partiesNot applicable 

5.       Number of Shares to Be Transferred and Status of Share Ownership Before and After Transfer

  1. Number of shares owned before the transfer: 0 shares (ownership percentage: 0%)
  2. Number of shares to be transferred and consideration for same: 20,328 shares (ownership percentage: 66%) (9,240 million yen [*])
  3. Number of shares owned after transfer: 20,328 shares (ownership percentage: 66%)

*Note: Consideration for this transfer is based on financial figures of the companies being transferred, including NDS, as of December 31, 2019. The ultimate transfer consideration may be adjusted ex post facto based on the financial figures at the time of transfer.

6.       Schedule

  1. Contract signing date: March 25, 2020
  2. Share transfer date: July, 1, 2020 (scheduled)

The date is subject to change according to progress of Competition Law Permit etc.

7.       Future Prospects

The impact of this transaction on consolidated performance is minor.

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