(Reuters) - A public-private fund that will acquire the small- and midsize-LCD operations of Toshiba Corp, Hitachi Ltd and Sony Corp will also buy a Panasonic Corp factory for about 20 billion yen ($255.5 million), Japanese business daily The Nikkei said.

The Innovation Network Corp of Japan has already announced plans to combine the LCD businesses of the three companies under a single operation. The new company, to be owned 70 percent by the fund, is expected to be set up by next April, the daily said.

Though the Panasonic factory in Chiba Prefecture in Japan is meant for producing larger LCD panels for televisions, buying it will help the new firm boost production and save on capital investment costs, the business daily said.

The new firm will invest about 100 billion yen ($1.28 billion) to convert the Panasonic TV-LCD unit into a plant for producing small and midsize LCDs meant for phones and tablets, Nikkei said.

The factory will begin producing LCD panels for smartphones and tablets in the fall of 2012, the daily said.

Panasonic, which owns a separate, new plant for TV-LCDs in Hyogo Prefecture, has already decided to scale back LCD production to improve the profitability of its TV business, Nikkei said.

(Reporting by Durba Ghosh in Bangalore)