Shares of LG.Philips LCD jumped more than 5% on Friday on market talk that stakeholder Philips could sell 14% of the South Korean flat-screen maker to Japan's Toshiba.
In a research report earlier on Friday, Song Myung-sup, an analyst at CJ Investment, cited a story in Taiwan online publication DIGITIMES, which quoted Chinese news site Sina.com, that Toshiba could buy a 14% stake in LG.Philips, out of the Dutch electronics maker's 32.9% stake.
"Talk of a sale to Toshiba is not without credibility since Toshiba has already invested in an LG.Philips flat-screen plant in Poland," Song told Reuters, referring to a $46 million deal inked in late 2006. "But the amount quoted in the report, $1 billion, is too low compared to LG.Philips' current stock price, and raises questions about the credibility of the whole report."
Officials at Toshiba were not available for comment.
Shares in LG.Philips rose as much as 5.6% on growing confidence that the Dutch firm would find a buyer for a good part of its LG.Philips stake, reducing the amount it would sell in the market.
Other analysts were surprised that the sale talk centered on Toshiba, which is not a top-five LCD maker and ranks far behind LCD market leader Samsung Electronics or plasma panel giant Matsushita.
"Matsushita was said to be the likely candidate to purchase Philips' shares, so I'm surprised there's talk of Toshiba," said Lim Chang-gue, a fund manager at Samsung Investment Trust Management. "The recent pick-up on panel prices is a good sign for the outlook of the LCD sector. So if you want to invest in it, now is a really good time to do it."
Investors have been expecting Philips to find a strategic buyer for its shares when its ownership lock-up period expires in July.
"If LG.Philips LCD shares rise to the mid-40,000 level, Philips will definitely be selling its stake," said Jae H. Lee, an analyst at Daiwa Institute of Research.
South Korea's LG Electronics owns a 37.9% stake in LG.Philips.