Seiko Epson and Sony today announced they have executed an agreement for Sony (China) Limited, a wholly-owned subsidiary of Sony, to acquire all of the equity of Suzhou Epson Co., Ltd. ("Suzhou Epson"), a wholly-owned subsidiary of Epson located in China that is engaged in small- and medium-sized TFT LCD production.
As part of its corporate vision and mid-range business plan, Epson is completing business structure reforms in its small- and medium-sized TFT LCD business. In implementing these reforms, in April 2010 Epson transferred to the Sony Group certain assets of the small- and medium-sized display front-end process manufacturing-related business operated by its subsidiary, Epson Imaging Devices Corporation. Epson has now determined that it would also be beneficial to transfer Suzhou Epson, which undertakes the back-end and touch panel assembly processes of Epson Imaging's display business, to the Sony Group.
The Sony Group expects that the acquisition of Suzhou Epson will enhance the speed and efficiency of business operations of the Sony Group's small- and medium-sized TFT LCD production through a cohesive operation, which includes integrating manufacturing operations of TFT LCDs from back-end and touch panel assembly processes undertaken by Suzhou Epson to the front-end processes undertaken at Sony Mobile Display Corporation's Tottori Plant located in Japan and other facilities. Through the acquisition of Suzhou Epson's production capabilities for touch panels and LCDs for in-car units and smartphones, Sony aims to further strengthen its TFT LCD production capacity to meet increased market demand.
The Sony Group has been utilizing Suzhou Epson for the back-end process of small- and medium-sized TFT LCD production. The purchase price of this contemplated acquisition is 775 million Yuan ($118.2123 million), which was determined primarily based on Suzhou Epson's inventories corresponding to the orders already placed by the Sony Group as well as the cash and deposits owned by Suzhou Epson.
Epson and Sony plan to complete the transfer of all Suzhou Epson equity from the Epson Group to Sony (China) Limited in the first half of the fiscal year ending March 31, 2012, subject to the receipt of any necessary government approval.