For several months (beginning in September: see Rumour: Foxconn Takes Stake in Sharp Display Unit), Foxconn has been linked to a takeover of Sharp – either specific business units or the whole company. Finally, Sharp has accepted the Taiwanese firm’s bid.
The Wall Street Journal reports that Sharp has accepted Foxconn’s ¥700 billion ($6.2 billion) offer for its business, rather than the bid from the Innovation Network Corporation of Japan (INCJ). The two groups have been battling over the acquisition for months (Foxconn Closes in on Sharp Deal), with the INCJ fighting to keep Sharp in Japanese control.
Japanese Prime Minister Shinzo Abe has called for the country to open up more to overseas investment. The country’s minister of economy, trade and industry told reporters that he hoped Sharp would develop under Foxconn, and believes that jobs and the regional economy will be protected.
People familiar with Foxconn’s strategy say that the acquisition is part of chairman Terry Gou’s ‘Eyeballs Plan’, to become a major supplier of premium smartphone displays. He wants to compete with Samsung in the market.
Analysts remain sceptical about the acquisition. Foxconn has provided few details as to how it will prevent more losses at Sharp. Jefferies analyst Atul Goyal wrote that the company “doesn’t have any experience in any of Sharp’s businesses. In fact, it creates large conflicts of interest with this acquisition”.
Despite the win, on Thursday, Foxconn announced that it will delay signing the deal, as it has received new information on liabilities that needs to be clarified.
Analyst Comment
See the editorial in this issue for our comment on this topic.
