Japan's Sharp and Pioneer will form comprehensive capital and operational alliances.
The two electronics makers agreed to cross-hold each other's shares through third-party allotments. Pioneer plans to issue new shares in December worth 41.4 billion yen (US$357 million) that will go to Sharp. The capital increase will make Sharp the top shareholder in Pioneer, with a 14% stake in voting rights.
News of the alliance sent shares of Sharp down more than 2% in the morning trading session Tokyo, while Pioneer stock rose nearly 3%.
The two companies expect the alliance to help them survive intensifying global competition by taking advantage of their technological strengths.
Sharp leads the domestic market for liquid crystal display panel TVs. Pioneer has expertise in audio technologies. But Pioneer's profits have been falling because of poor sales.
They will collaborate in development of products in various fields, such as next-generation DVD players and automotive electronics devices.
Analysts say the alliance could trigger further realignments in the Japanese industry, where more than ten makers vie with domestic and foreign rivals.
Earlier this year, camera maker Pentax agreed to a 105 billion-yen tender offer from lens maker Hoya to take advantage of similar technologies to lower costs.
Other realignments in the works include Sony, which sold several noncore businesses, including a chain of cafes, and is preparing to list a financial subsidiary as part of a continuing restructuring. Matsushita Electric Industrial sold a real-estate business and recently struck a deal that will take struggling Victor Co. of Japan off its books. Sanyo Electric, which is being restructured under the guidance of Goldman Sachs, is looking to sell its semiconductor-chip business.
Sharp will sell treasury shares it owns to Pioneer for 19.7 billion yen. Pioneer will acquire 0.91 percent in Sharp on a voting-right basis.