Sharp Soars in Tokyo After Report Hon Hai May Raise Offer

Sharp Expects Profit from TV Operations

An employee uses a remote control as he inspects a Sharp Aquos LCD television.

Photographer: Tomohiro Ohsumi/Bloomberg
  • Hon Hai may increase bid to 700 billion yen, Yomiuri reports
  • Creditor Mizuho pledges support for Sharp revival plan

Sharp Corp. rose the most in more than two years in Tokyo trading after the Yomiuri newspaper reported Hon Hai Precision Industry Co. may raise its offer for the Japanese iPhone-supplier by 40 percent to 700 billion yen ($5.9 billion).

Shares closed 15 percent higher, the most since June 2013, at 125 yen after earlier soaring 23 percent. That boosted Sharp’s market value by about 27.22 billion yen, and trading volume was more than triple the three-month full-day average.

Sharp is considering selling a stake in its liquid-crystal-display operation to government-backed Innovation Network Corp. of Japan or to Hon Hai, a unit of Taiwan’s Foxconn Technology Group that assembles the iPhone, people with knowledge of discussions within the companies have said. Sharp, which makes displays for mobile phones, tablets and TVs, remains dependent on its main lenders for survival.

“Hon Hai wants to get Sharp’s liquid-crystal-display technology,” said Yasuaki Kogure, chief investment officer at SBI Asset Management Co. He said INCJ may raise its offer for Sharp in response to Hon Hai’s move.

Sharp isn’t in a position to comment on the Yomiuri report, said Yoshifumi Seki, a spokesman for the company. Chu Wen-min, a spokesman for Hon Hai, declined to comment.

Mizuho Support

Sharp has vowed to revamp its LCD business and acknowledged talks with other companies after booking more than 1.2 trillion yen in losses during the past four financial years as lower-cost South Korean and Chinese rivals undercut its core TV business. On Thursday, the chief executive officer of creditor Mizuho Financial Group Inc. pledged support for Sharp’s revival plan.

Hon Hai, which makes smartphones, video-game consoles and personal computers on a contract basis, said in September it signed a letter of intent to buy a stake in Sharp and was negotiating a price and conducting due diligence, people familiar with the plan said at the time.

Hon Hai is Foxconn’s largest unit and the world’s biggest maker of iPhones, getting about half its revenue from Apple Inc. Chairman Terry Gou is seeking to expand beyond assembly to offer components, including displays and semiconductors.

The Hon Hai offer signed in September would give Foxconn management control as the Japanese electronics maker spins off its liquid-crystal display business, according to the people familiar with the plan. Foxconn had wanted to model the deal on Gou’s personal investment in Sharp’s Sakai Display operations in 2012, which gave the Taipei-based company management control over the LCD factory, one of the people familiar said.

Sharp first agreed to sell a stake to Hon Hai in 2012, yet talks foundered over disagreements on price and Foxconn’s prospective role in management. Gou later said he’d been “fooled” in discussions and both sides decreased exchanges.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE