Foxconn to take control of Sharp
TAIWAN: Taiwan's Foxconn Technology Group won a board vote to take control of struggling Japanese electronics maker Sharp Corp. but then said it would postpone signing a definitive agreement because of "new material information." Under an agreement announced by Sharp, Foxconn, the parent of Hon Hai Precision Industry Co., would control 65.9 percent of Sharp after buying new shares at 118 yen apiece. That's 32 percent less than Wednesday's closing price. Sharp shares slumped 14 percent after details of the deal were announced.
The board of the century-old consumer electronics maker had to choose between Innovation Network Corp. of Japan's plan to restructure by spinning off businesses, or staying whole under a foreign parent. Foxconn, the main assembler of Apple Inc.'s iPhone, is aiming to take over one of the largest suppliers of screens for phones and tablets. Chairman Terry Gou is seeking to broaden Foxconn's remit, transforming it into a company that also makes key electronics components and devices. "Sharp shareholders face a large dilution, but at least the stock isn't worth zero," said Atul Goyal, an analyst at Jefferies Group LLC. "It isn't a victory for Sharp shareholders. And I'm not at all sure if this is a victory for Foxconn and its shareholders may see that money simply evaporate." Sharp finished Thursday at a nine-month low of 149 yen. It would raise 484.3 billion yen ($4.3 billion) from the sale of shares to the Taiwanese company, according to a filing. Foxconn would also put down a 100 billion yen deposit that Sharp can keep if the sale, which is contingent on shareholder approval, doesn't go through. Foxconn put out a statement late Thursday raising questions about the final agreement.