Sony and Samsung Electronics have signed an agreement for Samsung to acquire all of Sony's shares in S-LCD, the two companies' LCD panel manufacturing joint venture established in 2004, making S-LCD a wholly-owned subsidiary of Samsung. Sony will receive KRW 1.08 trillion from Samsung for the stake. Concurrently, the two companies have entered into an agreement for the supply and purchase of LCD panels. The agreement also allows Sony and Samsung to continue cooperative engineering efforts focused on LCD panel technology. For Sony, this transaction will enable it to monetise its shares in S-LCD and secure a supply of LCD panels from Samsung, based on market prices and without the responsibility and costs of operating a manufacturing facility. The share transfer and payment are targeted to close by the end of January 2012, subject to regulatory approvals. As a result of the transaction, Sony will take a non-cash impairment loss of approximately JPY 66 billion in the fiscal third quarter to 31 December, due to the revaluation of its S-LCD shares. Despite this one-time loss, Sony estimates that the transaction will result in substantial savings from 2012 on costs associated with procurement of LCD panels. The current estimate of the yearly savings is approximately JPY 50 billion. Sony said it's still reevaluating its full-year results forecast to take into account the transaction and other factors.
