Sharp accepts Foxconn's rescue bid
MONEY-LOSING Sharp yesterday accepted a multi-billion-dollar bailout from the parent of Taiwan's Foxconn, ending speculation over its uncertain future with the first foreign takeover of a major Japanese electronics firm.
Sharp - which has teetered on the edge of bankruptcy for years - had been mulling over rival offers from Taiwan-based Hon Hai Precision, better known as Foxconn, and the public-private Innovation Network Corporation of Japan (INCJ).
Yesterday, its board unanimously chose the rescue package from colourful billionaire Terry Gou, whose firm is the world's biggest electronics supplier, counting iPhone maker Apple among its top clients.
But after the announcement, Foxconn said it would postpone signing the deal because it had to review a new "key document" it had received from Sharp.
"We notified Sharp... that our side needs to clarify the content and postpone signing a deal," it said in a statement.
"We look forward to clarifying it soon so the deal can come to a satisfying ending."
Foxconn did not elaborate and a Sharp spokesman could not offer further details.
Mr Gou, 65, has been courting Sharp for years but Japan's government was reportedly concerned about Sharp's key technologies falling into the hands of a foreign firm.
Despite its bleeding balance sheet, Sharp is still a leader in liquid crystal display (LCD) technology and the firm remains one of Japan's best-known corporate brands overseas.
Foxconn's chief held meetings with Sharp this month at its headquarters in Osaka, declaring a deal was all but done.
But Sharp's chief refused to show his hand, insisting both offers were being considered.
Under the deal, Hon Hai will take a 65.9 per cent stake in Sharp worth 489 billion yen (S$6 billion). Media reported the value of the deal could reach 700 billion yen if it includes Sharp's debt.
Sharp's volatile stock dived nearly 15 per cent to 149 yen in Tokyo on fears the deal would dilute the value of current investors' shares although analysts cheered the tie-up.
"Hon Hai and Sharp complement each other," said Yukihiko Nakata, a technology professor at Ritsumeikan Asia Pacific University and a former Sharp engineer.
"Sharp is strong in research and development while Hon Hai knows how to market products to customers such as Apple and it also has expertise in production. Together, they can go global," he noted.
The pair have worked together on large-sized screen technology, including for television sets, and jointly operate an LCD panel plant in Japan.