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Sharp Accepts Takeover, Foxconn Not Ready to Sign

Sharp Accepts Takeover, Foxconn Not Ready to Sign

By Associated Press | Updated: 25 February 2016 17:02 IST

Sharp Corp. announced Thursday it will accept a JPY 489 billion ($4.4 billion or roughly Rs. 30,239 crores) takeover by Taiwan's Hon Hai Precision Industry Co., also known as Foxconn, but Foxconn said it was not ready to sign the deal.

"We will have to postpone any signing of a definitive agreement until we have arrived at a satisfactory understanding and resolution of the situation," Foxconn Technology Group said in a statement.

It did not elaborate. If the deal goes through, Sharp would become the first major Japanese electronics maker to be acquired by a foreign company.

Foxconn is a major contractor to Apple Inc., assembling products such as iPhones.

Sharp chose Foxconn as its preferred partner in a two-day board meeting ending Thursday, and said Foxconn would gain a 66 percent stake in the company under the deal.

Sharp spokeswoman Nali Li said the company had no official comment on the statement from Foxconn, but it did not see it as a rejection of Sharp's announcement, just a request for time to look at details.

Sharp had been considering both Foxconn's bid and an offer from a Japanese government-backed consortium of Japanese investors.

Despite Japan's rapid globalization, some have expressed fears a Foxconn takeover will result in the country losing technology to foreign interests.

Media reports in Japan that a deal might be imminent had sent Sharp share prices initially higher on the Tokyo Stock Exchange, but they finished 14 percent lower after details of the deal leaked. Sharp made the announcement after trading ended.

Osaka-based Sharp has long been a prized brand in Japan, beginning with its sale of mechanical pencils, still known as "sharp pencils" here. It also pioneered hand-held electronic devices.

Sharp had its beginnings as a Tokyo-based metalworking shop in 1912. It later made its fame with Aquos flat-panel TVs and nifty Internet-connecting cellphones, long before the arrival of iPhones in Japan.

But its finances deteriorated in recent years as prices of LCD panels dropped, and it could not beat competition from Asian rivals.

Analysts say Sharp's future remains uncertain even with the takeover because of challenges in restructuring its consumer electronics operations.

Sharp suffered a JPY 108 billion ($964 million or roughly Rs. 6,623 crores) loss over the nine months through December. It has not released a full year profit or loss forecast.

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