Sony sells its stake in Samsung LCD team-up for $939 million

• Samsung to amass all of Sony’s shares of S-LCD, making the three way partnership its wholly-owned subsidiary
• Sony and Samsung enter right into a strategic agreement for supply and buy of LCD panels.

Tokyo, Japan – Sony Corporation (“Sony”) and Samsung Electronics Co., Ltd. (“Samsung”) today announced that both companies have signed agreements to transition the present business relationship with respect to LCD panels.

Under the agreement, Samsung will acquire all of Sony’s shares of S-LCD Corporation (“S-LCD”), the 2 companies’ LCD panel manufacturing three way partnership, making S-LCD an entirely owned subsidiary of Samsung. In consideration for the proportion transfer, cash consideration of roughly KRW 1.08 trillion* would be paid to Sony by Samsung. Concurrently, both companies have entered right into a new strategic agreement for the provision and buy of LCD panels with a goal of enhancing the competitiveness of both companies. The agreement also allows Sony and Samsung to continue cooperative engineering efforts thinking about LCD panel technology.

For Sony, this transaction will enable it to monetize its shares in S-LCD and aims to secure a versatile and steady supply of LCD panels from Samsung, in keeping with market prices and without the responsibility and fees of operating a producing facility. With whole ownership of S-LCD, Samsung anticipates heightened flexibility, speed and efficiency in both panel production and business operations.

Established in April 2004, S-LCD has continued to deliver advanced and value-competitive LCD panels to either one of its parent companies, contributing to the growth of the respective parties’ TV businesses, and the big-sized LCD TV market overall. However, LCD panel and television market conditions have now changed. So they can reply to such challenging conditions and to bolster their respective market competitiveness, the 2 companies have agreed to shift to a brand new LCD panel business alliance.

The proportion transfer and payment are targeted to shut by the top of January 2012, subject to necessary approvals from regulatory authorities.

Because of this transaction, a non-cash impairment lack of approximately JPY 66 billion is predicted to be incurred by Sony within the third quarter of the fiscal year ending March 31, 2012, as a result of reevaluation of its S-LCD shares. This loss includes an impact from the fluctuation of exchange rate. Despite this one-time loss, Sony estimates that the transaction will lead to substantial savings on and after January 1, 2012 in respect of prices related to its
procurement of LCD panels. The present estimate of the once a year savings in respect of such costs is approximately JPY 50 billion, when compared with LCD panel procurement costs estimated for the fiscal year ending March 31, 2012. Neither the only-time loss nor the estimated cost savings were included in Sony’s forecast of consolidated financial results for the present fiscal year ending March 31, 2012, announced on November 2, 2011. Sony is currently reevaluating this forecast, making an allowance for this transaction and other factors that would affect its full year FY2011 consolidated financial results forecast.

Facts about S-LCD
Established: April 26, 2004
Capital: KRW 3.3 Trillion
(Samsung Electronics: 50% plus 1 share, Sony: 50% minus 1 share)
Representative: Location: Production Items:
Donggun Park, CEO
Tangjeong, Chung Cheong Nam-Do, South Korea 7th and 8th generation Amorphous TFT LCD
*Note: The overall amount of such payment would be determined in keeping with S-LCD’s financial statements as of the top of December 2011.