Sony Dissolves Joint Venture with Samsung & Enters into a Promising ’New Strategic Agreement’

Tired of losing money for the seventh consecutive year on their TV sales, Sony has agreed to sell all of their S-LCD shares to Samsung for approximately KRW 1.08 trillion, which is about $935 million. S-LCD was a joint venture between the two companies, in which Sony owned 50% minus one share and Samsung owned 50% plus one share. Samsung will acquire 100% of S-LCD shares pursuant to the purchase of all of Sony’s shares and the joint venture will dissolve. The companies signed the contract on December 26, 2011, and the expected transaction date is January 19, 2012, according to Samsung U.S. News Center.

Sony also entered into a “new strategic agreement” with Samsung to purchase a steady supply of LCD panels based on current market prices. This will allow Sony to use the money from the sale of it’s shares to receive LCD panels from Samsung without the headache of maintaining a manufacturing facility of their own. According to Sony, the agreement made between the two companies will facilitate a cooperative environment in regards to future LCD panel technology developments between the two companies.

Sony is certainly losing a considerable stake by dissolving their joint venture; but, hopefully the loss will be worth it. I guess only time will tell if the share transfer coupled with the agreement will actually pay off in the long-run. Do you think Sony made a wise decision by transferring their shares to Samsung and entering into a new agreement?

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