Hisense Electric, a wholly owned subsidiary of China-based Hisense Group, revealed Tuesday that it will purchase certain television assets of Japan’s Toshiba Corp., including TV production, brand, R&D and operation service, effective Nov. 14, 2017.
Under the deal, Hisense will purchase 95 percent stock shares of Toshiba Visual Solutions Corporation (TVS), a wholly owned subsidiary of Toshiba Corp., for $113.6 million (12.9 billion Japanese Yen) with Toshiba retaining 5 percent of the stock.
Hisense will obtain the TVS businesses including production, research and development, and sales functions as well as the license to use the Toshiba brand for a period of 40 years for visual solution partners operating in Europe, South East Asia and other markets.
The acquisition will give Hisense, which is among the largest manufacturers and marketers of televisions in China, yet another popular television brand for marketing purposes, although which territories will be available for use is complicated by several prior licensing deals for the brand in various markets around the world.
Hisense currently markets televisions here under the Hisense and Sharp brands. Hisense licensed the Sharp brand three years ago from Japan’s Sharp Corp., which was struggling with a large debt load. Sharp Corp. later fell under the control of Taiwan’s Hon Hai Precision, a company owned by Foxconn, and run by Terry Gou. Foxconn has been aggressively trying to get the rights to the Sharp brand back from Hisense to relaunch it under Sharp/Foxconn control in the United States.
Hisense still has two years to go on an initial five-year license for the Sharp brand in the United States, so it will be interesting to see if the Chinese manufacturer will replace Sharp with the Toshiba brand for the new retail distribution channels it has developed for its Sharp lines.
The announcement followed by a few days the Tokyo-based firm’s reported $436 million net loss for the fiscal first half. Toshiba is reportedly also in the process of trying to sell its chip business to a group of investors including Bain Capital. Meanwhile, The Visual Solutions subsidiary reported a $54.1 million net operating loss in the last fiscal year.
Toshiba, which like Sharp has been struggling the past several years, licensed off the Toshiba brand for televisions in the United States to Taiwan electronics manufacturer Compal Electronics. A Hisense spokesman in the United States contacted by HD Guru was not able to say Tuesday what, if any plans, Hisense has for the Toshiba brand for television sales and marketing here.
In a statement, Hisense seemed to indicate that much of its initial interest in TSV will be to produce and market televisions in Japan and other Asian markets, where Toshiba continues to have a strong brand presence. Hisense said Toshiba has long had respected display technology in Japan and continues to enjoy high international global technology brand awareness.
Read more about Hisense’s purchase of the Toshiba television business after the jump:
In a statement announcing the deal, Hisense said TVS will primarily handle TVs and various ancillary products, including commercial and advertisement display products. The TVS purchase also secures two factories in Japan and “hundreds of talented Toshiba R&D employees as well as a significant IP portfolio relating to TV technology business patents for image quality and acoustics.”
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Liu Hongxin, Hisense Group CEO, stated that Hisense plans to optimize TVS in the areas of R&D, supply chain and global sales channels.
It expects the two companies will “cooperate with and support each other in display technology, provide competitive content operation services for smart TVs for the global market and accomplish fast growth in the Japanese market.”
According to market research firm IHS, sales of Toshiba TV ranked No. 3 in the Japanese market in 2016 while TV market share in Japan was the highest among all non-Japanese brands.
After the businesses are combined, Hisense said the two brands’ cumulative market share will top 20 percent of the television market. Hisense quoted IHS figures showing its TV business last year ranked third in the world and was “the No. 1 market share position in China for 13 consecutive years.”
With the acquisition, Hisense said it is preparing to expand and implement its global brand vision and strategy. Hisense added that it will develop and enlarge its international strategy for the TV business in R&D, branding and marketing by operating under multiple brands.
By Greg Tarr
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