By Matthew Henry

TOKYO: Pioneer Electronics Australia has confirmed that a deal struck with Sharp Corporation today in Japan for a mutual shareholding arrangement has opened the possibility that the plasma maker could release LCD TVs to the market.

While detailed plans have not yet been formulated, Pioneer Australia today confirmed to that one possible outcome from the deal is a move into the LCD TV market.

“The latest joint announcement between Pioneer and Sharp is extremely exciting for both companies,” said Pioneer spokesperson, Michael Broadhurst, this afternoon.

“From a Pioneer perspective, it opens up the door for both companies to improve their technology offering to the marketplace, and while the details are still to be finalised, there are opportunities for us around flat panel display, such as LCD, as well as in Blu-ray and in-car navigation.”

Sharp announced this morning that it will pay $US365 million for 30 million newly-issued shares in its Japanese rival, which would make the Sharp the largest shareholder in the company with a 14 per cent holding.

Further cementing the relationship, Pioneer will reciprocate by buying 10 million shares in Sharp valued at $US171.4 million.

Sharp is one of the world’s top makers of LCD panels and TVs, while Pioneer has focused on developing plasma TV technology including its latest Kuro panels, which were launched in Australia yesterday.

According to the Japan Times, Pioneer president, Tamihiko Sudo, also floated the possibility of drawing on Sharp’s LCD manufacturing to broaden the company’s flat panel TV offering.

"Other rival makers of plasma TVs all produce both plasma and LCD TVs… We made a realistic decision," said Sudo.

Sudo reportedly told a press conference following the Sharp deal that the companies would not integrate management, but buying LCDs from Sharp would have mutual benefits, such as boosting Sharp’s efficiency by upping panel production.

"Of course, Sharp will have a bigger presence as a top shareholder, but our management will be independent," said Sudo.

The deal would see both companies able to draw on each others strengths, allowing each to not only increase their product range but cut costs by drawing on their core strengths – for example, Sharp in LCD screens and Pioneer in navigation products.

The companies have already announced plans for collaboration on development of Blu-ray hardware.

"Technology has been developing significantly faster compared to the past, so in order to cover core technology and know-how that we do not have, we believe a strategic business alliance is needed," Sharp president and COO, Mikio Katayama, in a statement today.

Reuters reports that Sharp shares tumbled more than two per cent today on the news, while Pioneer shares rose around 1.8 per cent.