- Chairman Gou talks to reporters at Sharp headquarters in Osaka
- Battle has been seen as test case of Japan market's openness
Foxconn Technology Group Chairman Terry Gou took a step forward in the hotly contested battle for control of Japan’s Sharp Corp., saying he’s become the preferred negotiating partner for a bailout of the struggling consumer electronics maker.
Gou spoke outside Sharp headquarters in Osaka after a meeting that stretched to nine hours, long past its planned completion. He held up a paper with his signature and that of Sharp Chief Executive Officer Kozo Takahashi, and said he expects to have a final agreement by the end of February. He wore a red sweater and gold scarf, celebratory colors in China.
"We are 90 percent there, the remaining 10 percent are legal matters and are not a big deal," he told reporters, smiling and speaking in Chinese with a Japanese translator. “There will be no breakup of Sharp. I guarantee that the Sharp brand will go on."
Gou made the last-minute trip to Japan to step up pressure on the company to quickly accept his proposed bid, after Takahashi said Thursday he planned to take another month to choose between Foxconn and the rival bidder, government-backed Innovation Network Corp. of Japan.
The stock gained 10 percent to 176 yen at the close in Tokyo trading, after climbing 17 percent yesterday.
After Gou’s comments, Sharp issued a statement saying it had not announced Foxconn was a preferred partner, contradicting his characterization of the agreement.
“There needs to be a board decision to give a preferred negotiating partner status,” said Atsushi Yoshida, a spokesman for Sharp. “The board meeting yesterday didn’t yield such status and there was no meeting today. We plan to continue our talks with INCJ."
Takahashi told reporters Thursday that neither of the potential partners is preferred over the other at that point, contradicting several media reports. He was questioned repeatedly about whether one bidder was favored over the other and refused to concede the point.
"Both parties are on the same footing," Takahashi said that day.
A victory for Foxconn would mark a shift for Japan, where struggling companies have long been protected and supported financially by the government and banks. INCJ helped bail out domestic companies in semiconductors and displays in the past, injecting capital to help management restructure operations.
“It’s a bellwether transaction,” said Nicholas Benes, representative director of the Board Director Training Institute of Japan, which specializes in directorship and governance training. "Finally the government has decided it just won’t do to prefer your own deal over another, particularly when you are spending taxpayers’ money."
Gou has pushed hard for a deal even as it looked unlikely he would win. Sharp had been inclined to take the bid from INCJ, which offered about 300 billion yen, people familiar with the matter said last month. But then Gou raised his bid from 600 billion yen to about 660 billion yen ($5.6 billion) and flew to Japan to make a personal appeal to Sharp’s board, its banks and government officials, a person familiar with the matter has said.
As recently as Jan. 31, Gou said he was confident of winning the bid and had no need to go back to Osaka this week, leaving the deal to his staff to work out. His return on Friday was unscheduled, with Foxconn holding annual week-long internal meetings with executives who flew in from around the world.
He repeatedly praised Sharp at the press gathering in Osaka. He said Foxconn’s capital would allow the company to invest and return to leadership in LCDs.
“Sharp’s young engineers are truly remarkable. There is so much to learn,” he said. “Sharp’s LCD technology was once cutting edge, but ran out of stamina for investments.”