Japans Sharp has said today that it will buy a majority stake in Toshibas personal computer business for ¥ 4bn (£27.2m), in a move which briefly saw its share price rise before falling to a 17-month low by as much as 10 per cent.
The deal, which will see Sharp take an 80.1 per cent ownership in Toshibas PC unit this October, was meant to highlight the business recovery by Taiwanese parent company Foxconn after experiencing financial issues two years ago.
Shortly after the acquisition was announced, a further statement from Sharp which said it plans to issue ¥ 200bn (£1.36bn) in new shares as it expands its business into new sectors has seen its share price drop as much as 10 per cent.
Sharps share price had risen as much as 3.3 per cent off the back of the acquisition in morning trading, with shares in Toshiba rising by 1 per cent. In late afternoon trading, Sharps share price was down by 4.1 per cent.
The funds are planned mostly to buy back preferred shares from Sharps main lenders, Mizuho Financial Group and Mitsubishi UFJ Financial Group.
Sharp had previously exited the PC market in 2010, as it struggled to compete with Asian rivals. However the success of its low-cost TV business saw the company turn its first net profit in four years in March, with help from Foxconns sales network in China, and now hopes to use the acquisition to produce PCs at a similar scale.