Foxconn Closes in on Sharp Deal

By Tom Allen
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According to Reuters, Sharp has accepted Foxconn’s takeover bid, and the companies are aiming to finalise a deal by the end of the month.

Foxconn is said to have been granted preferred negotiating rights. Most of the remaining issues to be resolved are legal and regulatory, president Terry Gou has said.

Sources familiar with the matter told Reuters that Foxconn has offered ¥659 billion ($5.6 billion) for Sharp, up from the ¥625 billion ($5.2 billion) that was rumoured last week (Gou ‘Confident’ About Sharp Offer).

With a takeover of Sharp, Foxconn would gain access to the Japanese firm’s display technology, such as the Freeform Display. However, there are concerns about competition from rivals in South Korea and China, which have dramatically impacted Sharp’s LCD business in recent years.

Japanese sources have said that there is ‘some wariness’ about the deal, after Foxconn reneged on a previous 10% acquisition in 2012 (Display Monitor Vol 19 No 32). However, Sharp CEO Kozo Takahashi stressed that the companies have forged a “good relationship” through their co-operation on the G10 Sakai plant.

The INCJ, an investment fund backed by the Japanese government, is said to be fighting to have its own offer considered. The fund proposed a package of cash, asset sales and lender support which, it says, is worth ¥1 trillion ($8.7 billion), according to documents obtained by Bloomberg. The offer included a ¥300 billion ($2.6 billion) cash infusion, as well as ¥350 billion ($3 billion) in support from its lenders; the raising of ¥150 billion ($1.3 billion) from the INCJ’s stake in Sakai Display Products; and ¥200 billion ($1.7 billion) in financing.

The focus of the INCJ’s deal, which is aimed at keeping a Japanese company in Japanese hands, is said to be on restructuring rather than revival.

Following Gou’s declaration of preferred negotating rights, Sharp spokesperson Atsushi Yoshida contradicted him. Yoshida said, “There needs to be a board decision to give a preferred negotiating partner status… The board meeting yesterday didn’t yield such status and there was no meeting today. We plan to continue our talks with INCJ”.

The INCJ has proposed a merger of Sharp’s LCD operations with those of Japan Display, in which it is also a major shareholder.