Fox­conn deal near fi­nal­iz­ing ap­proved by Sharp's board

The Pak Banker - - COMPANIES/BOSS -

Fox­conn Tech­nol­ogy Group and Sharp Corp. are aim­ing to sign their $6 bil­lion takeover agree­ment as early as Mon­day af­ter de­cid­ing the deal won't re­quire ma­jor changes, ac­cord­ing to peo­ple fa­mil­iar with the mat­ter.

The two sides have been go­ing through a list of po­ten­tial li­a­bil­i­ties and con­cluded they will be much less than ini­tial con­cerns they could ex­ceed 300 bil­lion yen ($2.6 bil­lion), said the peo­ple, who asked not to be iden­ti­fied be­cause the mat­ter is pri­vate. That would pave the way for Fox­conn to pro­ceed with its pro­posed deal of pay­ing about 500 bil­lion yen for a ma­jor­ity stake in Sharp, along with ad­di­tional pay­ments for pre­ferred shares.

Fox­conn Chair­man Terry Gou has pur­sued Sharp since at least 2012 and had ap­peared on the verge of grasp­ing his prize when the Ja­panese com­pany's board ap­proved his deal last week. But Fox­conn a few hours later said it would post­pone the fi­nal agree­ment un­til it had got to the bot­tom of ma­te­rial new in­for­ma­tion pro­vided by Sharp just a day ear­lier. That in­for­ma­tion is about con­tin­gent li­a­bil­i­ties that the com­pany could in­cur through lay­offs or re­struc­tur­ings, peo­ple fa­mil­iar with the mat­ter have said.

Sharp has been los­ing money for years and its need for fi­nan­cial sup­port set off the takeover bat­tle last year be­tween Fox­conn and the govern­ment-backed In­no­va­tion Net­work Corp. of Ja­pan. The com­pany's cash to­taled 208.5 bil­lion yen at the end of De­cem­ber, and it is pro­jected to lose more than 100 bil­lion yen in the fis­cal year that ends this month, ac­cord­ing to data com­piled by Bloomberg.

Sharp also faces the ex­pi­ra­tion of 510 bil­lion yen in credit lines and loans on March 31. The com­pany's banks have pushed for a bailout agree­ment be­fore those loans are re­newed, peo­ple fa­mil­iar with the mat­ter have said. The banks, Mizuho Fi­nan­cial Group and Mit­subishi UFJ Fi­nan­cial Group, could fin­ish the re­newals by the dead­line if Sharp and Fox­conn reach fi­nal terms next week, said the peo­ple.

Terms for Sharp's cred­i­tors may be re­vised from the orig­i­nal takeover agree­ment, the Wall Street Jour­nal re­ported Fri­day, with­out spec­i­fy­ing what those changes could be.

Fox­conn de­clined to com­ment, re­peat­ing its Feb. 28 state­ment that nei­ther side has set a sign­ing date and are work­ing to reach a sat­is­fac­tory agree­ment. Yoshi­fumi Seki, a spokesman for Sharp, also de­clined to com­ment. Sharp shares rose 9.4 per­cent to 151 yen at the close of trade in Tokyo. The shares have gained 21 per­cent in 2016 af­ter post­ing an­nual de­clines in five of the past six years.

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