China's SVA Electron scraps LCD buy as losses mount

BEIJING, June 3 (Reuters) - Chinese liquid crystal display maker SVA Electron Co (600606.SS) said on Wednesday it has cancelled a plan to take over an LCD unit from its parent because it was making big losses while the industry outlook remained bleak.

SVA Electron unveiled a 2.65 billion yuan ($388 million) deal last year to acquire a fifth-generation TFT-LCD manufacturing unit from its parent company and SVA Information Industry (600637.SS), mostly by a private placement of shares to its parent.

SVA Electron said weak sales and falling prices for liquid crystal display screens, especially after the financial crisis, had forced it to cancel the planned acquisition.

"(The LCD unit) has already made very heavy losses," it said in its annual shareholder meeting report. "The LCD market is still extremely weak and it is difficult to predict the unit's future profit-making ability."

SVA Electron reported a loss of 855.8 billion yuan in 2008 after a profit of 26.6 billion yuan in 2007. ($1=6.826 Yuan) (Reporting by Simon Rabinovitch; Editing by Ken Wills)