Foxxconn to Purchase Majority Stake in Sharp

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sharp_brand_page_logo.gifBloomberg reports that Foxxconn has finalized a deal to purchase a majority stake in Japan's Sharp Corporation. Foxxconn will get 66 percent of the company for $3.5 billion. Industry analysts say that Sharp's primary allure is that it provides screens for Apple's iPhones, which continues to make Foxxconn a valuable partner for Apple. The agreement includes a new clause that would allow Foxconn to buy Sharp's display business if the deal falls apart anytime before October 5.

From Bloomberg
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 Inc.'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 ($3.5 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.

Long Pursuit
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.

To read the complete Bloomberg article, click here.

Additional Resources
To Woo Apple, Foxconn Bets $3.5 Billion on Sharp at NYTimes.com.
•  Will Hisense's Purchase of the Sharp Brand Work Out for the Chinese TV Maker? at HomeTheaterReview.com.


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