UPDATE 2-Hon Hai to invest $1.2 bln in Hitachi LCD unit-Nikkei

* Hon Hai to invest $1.2 bln for majority stake -Nikkei

* Analyst says such a deal would be positive for Hitachi

* Hitachi says no such decision has been made

* Hon Hai spokesman says he has no knowledge of deal

* Hitachi shares up 0.3 pct, shares in Hon Hai down 0.4 pct
(Adds details, Hon Hai comment)

TOKYO, Dec 27 (BestGrowthStock) – Taiwan’s Hon Hai Precision Industry
Co (2317.TW: ) will buy a majority stake in a Hitachi Ltd (6501.T: )
display unit for about $1.2 billion, making it the world’s top
ranked maker of small and medium sized LCDs, the Nikkei newspaper
said on Monday.

The venture, Hitachi Displays Ltd, will use the funds to
build a factory in Japan that will supply Hon Hai, one of the
biggest manufacturers of Apple Inc (Read more about Apple stock future.)’s (AAPL.O: ) iPhone and iPad,
the newspaper said.

Combined with its recent acquisition of Taiwanese LCD panel
maker Chimei Innolux Corp (3481.TW: ), Hon Hai, which is owned by
electronics giant Foxconn, would become the world’s top maker of
smaller liquid crystal display panels with market share of 17.3
percent, outstripping Sharp Corp (6753.T: ) according to 2009 data.

But Sharp is also considering expanding its small LCD
production capacity, sources told Reuters this month. And
Japanese local officials said last week Toshiba Corp (6502.T: ) was
set to build a new LCD factory for 100 billion yen
[ID:nTKZ006709], which media reports say will supply Apple.

Goldman Sachs analyst Ikuo Matsuhashi welcomed the Nikkei
report as a sign Hitachi was continuing efforts to streamline its
sprawling business, after Canon (7751.T: ), which owns 25 percent
in Hitachi Displays, said in September it had dropped a plan to
take control. [ID:nTOE68R07L]

“We see the announcement as testimony to continuing
commitment to business restructuring and exits from non-core
businesses,” he wrote in a note to clients.

The Nikkei said Hitachi’s stake in the venture will drop to
about 30 percent from the current 75.1 percent, adding that the
the new plant would begin operating in 2012 and that it would
more than double the annual capacity of Hitachi Displays.

Shares in Hitachi were up 0.3 percent at 409 yen in Monday
morning trading, weaker than a 0.6 percent rise for the broader
Nikkei stock average (.N225: ). Shares in Hon Hai were down 0.4
percent at T$116.50.

Hitachi said no decisions had been made.

“Hitachi is constantly considering measures to strengthen its
operations but will not comment on individual plans under
consideration,” said company spokesman Atsushi Konno.

Hon Hai will make the investment through two 50 billion yen
payments, one in the year to March 2012 and one in the following
year, the Nikkei said.

A Hon Hai spokesman said he had not heard about the reported
deal.

Hitachi Displays ranked No.6 in the global market for small
and midsize LCD panels last year, with a share of 5.9 percent,
according to research firm DisplaySearch.
(Reporting by Yumiko Nishitani, Nathan Layne and Isabel Reynolds
in TOKYO and Baker Li in TAIPEI; Editing by Edwina Gibbs)

UPDATE 2-Hon Hai to invest $1.2 bln in Hitachi LCD unit-Nikkei