Fox­conn to take con­trol of Sharp

The Pak Banker - - COMPANIES/BOSS -

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.

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