Foxconn Technology wins control of Sharp with reduced RM15 billion offer
FOXCONN Technology Group Chairman Terry Gou finally clinched a deal to buy Sharp Corp. after years of pursuit, bringing together the main assembler of Apple’s iPhones with the electronics maker that built Japan’s first television sets.
The parent of Hon Hai Precision Industry Co. is paying 389 billion yen (RM15 billion) for a controlling stake in Sharp, a drop of 100 billion yen from an agreement forged a month ago. As a result, Foxconn and its affiliates will get 66 percent of the Japanese company for 88 yen per share, both companies said in statements on Wednesday.
“Finally, it’s decided,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “This is positive for Sharp, although it’s hard to imagine that Foxconn won’t have to keep providing funds.” The deal’s consummation caps weeks of drama, when the acquisition repeatedly looked like it could fall apart. Gou had appeared on the verge of grasping his prize a month ago, when Sharp’s board chose Foxconn over a rival bid from the state-backed Innovation Network Corp. of Japan. But after learning about liabilities at Sharp, Gou pushed back the final agreement to negotiate a lower price.
Foxconn’s total payment will probably increase. Under the agreement a month ago, the company had said it would spend an additional 100 billion yen to acquire preferred stock from Sharp’s main banks. Neither side discussed that transaction in Wednesday’s announcements. People familiar with the matter said last week that Foxconn would buy the shares, but delay payment. Toyodo Uemura, a spokesman for Sharp, declined to comment.
The agreement also includes a new clause giving Foxconn a backup plan that would let it buy Sharp’s display business if the deal falls apart anytime before Oct 5. If that happens, Sharp will give Foxconn, or a third party designated by Foxconn, exclusive negotiation rights for three months to buy the unit.
Two of Sharp’s 13 directors voted against the revised agreement, an unusual sign of protest in consensus-driven Japan. The previous deal had won unanimous board support.
Gou is seeking to broaden Foxconn’s remit, transforming the contract manufacturer into a company that will not only make key components and assemble devices, but also sell electronics products to consumers. The billionaire’s pursuit of Sharp stretches back to 2012, when he offered to buy shares at 550 yen apiece in a deal that was never completed.
“We have much that we want to achieve and I am confident that we will unlock Sharp’s true potential and together reach great heights,” Gou said in the statement. — WP-Bloomberg