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Announcement Regarding NEC Display Solutions Becoming a Subsidiary (Joint Venture) of Sharp Corporation

London, 27-03-2020
Sharp Corporation (hereinafter “Sharp”) decided and agreed with NEC Corporation (hereinafter “NEC”. NEC and its subsidiaries and affiliated companies shall be referred to as “NEC Group”) to acquire 66% of the shares of NEC Display Solutions, Ltd. (hereinafter “NDS”), a subsidiary of NEC, to become a subsidiary of Sharp and to be jointly operated with NEC as a joint venture.

1. Reason for Acquisition of Shares

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 etc. in the Japanese market.

NDS holds strengths in the global market centering in Europe and North America, while Sharp has its strengths in the Japan 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.

As the above, 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.

2. Overview of the Acquisition

66% 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. Name

NEC Display Solutions Ltd.

2. Location

Mita Kokusai Building, 4-28, Mita 1-

chome, Minato-ku, Tokyo, Japan

3. Job title and name of representative

Hisatsugu Nakatani, President

4. Business description

Development, manufacturing, and sales of visual display products and visual display solutions

5. Capitalization

3.0 billion yen

6. Date established

January 18, 2000

7. End of fiscal year

March

8. Major shareholder and shareholding

ratio

NEC 99.9%, NEC Networks & System

Integration Corporation 0.1 0/o

9. Relationship between the company in

question and the listed company

There 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 year

Ended March 2017

Ended March 2018

Ended March 2019

Net assets (equity)

4,930 million yen

7,553 million yen

5,756 million yen

Total assets

34,7s3 million yen

39,952 million yen

33,521 million yen

Net assets per share

160,064 yen

245,227 yen

186,883 yen

Net sales

s9,0T9 million yen

72,005 million yen

63,258 million yen

Operating income

897 million yen

2,492 million yen

(251 million yen)

Recurring profit

980 million yen

3,226 million yen

653 million yen

Net income

T24 million yen

2,849 million yen

(317 million yen)

Net income per

share

23,506 yen

92,500 yen

(10,292 yen)

Dividend per share

2,T50 yen

9,030 yen

46,200 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. Name

NEC Corporation

2. Location

7-1, Shiba 5-chome, Minato-ku, Tokyo,

Japan

3. Job title and name of representative

Takashi Niino, President & CEO

4. Business description

Public Business, Enterprise Business,

Network Services Business, System

Platform Business, Global Business

5. Capitalization

39T.2 billion yen

6. Date established

July 17, 1899

7. Consolidated net assets

1,060.3 billion yen

8. Consolidated total assets

2,950.6 billion yen

9. Major shareholders and shareholding

ratios

The Master Trust Bank of Japan, Ltd.

(Trust Account) 7.28%

Japan Trustee Services Bank, Ltd. (Trust

Account) 6.04%



NIHK A/C CLIENT (OWNED BY KKR



FUNDS) 3.45%


10. Relationship between the listed company and the company in question


Capital relationship

Not applicable


Personnel relationship

Not applicable


Business relationship

Business relationships exist with the company, such as product sales.


Applicable situation to related parties

Not 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.

Contact

ANGELA WOODWARD
European PR Manager
angela.woodward@sharp.eu

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