Sharp abandons plan to issue new shares
July 3, 2018
The Japanese company has opted to forego plans to issue up to $2 billion (€1.7 billion) worth of new shares, following a negative response from investors.
As Reuters reports, following its initial announcement a few weeks ago, the OEM’s investors promptly dropped its shares “on fears of earnings per share dilution.”
Last week, Sharp released a statement saying, “Due to increasing market uncertainties, the company decided that carrying on with the plan to issue new shares would not yield maximum benefit for shareholders”.
This announcement quickly brought an up-turn in the company’s shares of 17 percent, as investors responded positively to the volte-face.
“The shares fell after the announcement, so they decided to quit. It’s that simple,” said Masayuki Otani, chief market analyst at Securities Japan.
“To announce a new share issue, and then say ‘we changed our mind’ because the shares fell… that’s not common but not unprecedented.”
The idea behind Sharp’s initial decision to issue the news shares was to use the funds from those shares to “to buy back preferred shares that were issued to banks in return for a financial bailout in 2015.”
Sharp attempted to convince investors that this manoeuvre would be beneficial long-term, to no avail.
The Osaka-based company, which had previously been struggling, seems to be showing “signs of recovery” and, according to analysts, has “become more decisive and responsive to shareholders since it was taken over by Foxconn two years ago.”
The OEM also “recently posted its first annual net profit in four years” and has announced plans to purchase Toshiba’s personal computer division.
“My impression is that Sharp has really changed as a company,” said Hajime Nakajima, who works as chief strategist at investment advisory firm, AsLink.
Categories : City News
