Carlyle favorite for Japan LCD glass stake: source

TOKYO (Reuters) - U.S. private equity firm The Carlyle Group CYL.UL is in pole position to buy a majority stake in a venture owned by Japan's Nippon Sheet Glass (5202.T: Quote, Profile, Research, Stock Buzz) and Hoya Corp (7741.T: Quote, Profile, Research, Stock Buzz) in a deal worth about 120 billion yen ($1.11 billion) including debt, a source familiar with the situation said on Tuesday.

The Washington-based buyout firm will purchase Nippon Sheet Glass's 50 percent stake in the venture, NH Techno Glass Corp, while Hoya will retain most of its holding, other sources familiar with the deal said.

The deal has not been finalized and negotiations are still going on over the price and other matters, they said.

Reuters reported on November 2 that Carlyle was among the bidders for NH Techno Glass ID:T315872.

The privately owned firm produces LCD glass substrates in Yokkaichi, western Japan, and has operations in Taiwan, Singapore and South Korea. Its annual sales are around 50 billion yen ($455 million), and it posted a net profit in the year ended in March.

NH Techno Glass struggled after problems with its production line but in September 2006 it began cutting loss-making products and jobs, resulting in a move back into the black.

It is considered a minor player with a 4 percent share of the global market, according to research firm DisplaySearch. It ranks fourth behind Asahi Glass Co Ltd (5201.T: Quote, Profile, Research, Stock Buzz), Corning Inc (GLW.N: Quote, Profile, Research, Stock Buzz) and Nippon Electric Glass Co Ltd (5214.T: Quote, Profile, Research, Stock Buzz), which between them account for about 95 percent of the global market in glass for LCD panels.

Investment bank UBS is organizing the auction, sources said. UBS also advised Nippon Sheet Glass on its acquisition of British glassmaker Pilkington in 2006.

In a statement, Nippon Sheet Glass said nothing had yet been decided.