Japan Fund Said to Pitch Sharp on Plan for Smart-Appliance Giant

  • INCJ sets aside 100 billion yen as acquisition war chest
  • Strategy would focus Sharp on Internet-connected electronics

Innovation Network Corp. of Japan is pitching Sharp Corp.’s board on plans to create a Japanese smart home-appliances giant, as the state-backed fund seeks support for its bailout bid over a rival offer from an overseas bidder, people with knowledge of the matter said. 

INCJ, which has offered to inject about 300 billion yen ($2.6 billion) of new funds into Sharp, aims to use about 100 billion yen of that amount for acquisitions of other domestic appliance businesses, one of the people said. The Japanese fund is also preparing a bid for Toshiba Corp.’s white-goods unit, which it would then merge with Sharp, the people said, asking not to be identified as the information is private.

Under the plan being presented by INCJ, Sharp would focus on selling network-connected home appliances, taking advantage of a group of technologies known as the Internet of Things, according to the people. The Osaka-based company’s unprofitable liquid crystal display manufacturing operations would be combined with INCJ-backed Japan Display Inc. to build scale, they said.

INCJ is seeking to convince Sharp its bailout offer trumps a rescue bid from Taiwan’s Foxconn Technology Group, a sign the fund is determined to keep fighting in the takeover battle. Its plan to create a national champion in the home-appliance industry follows the creation of Japan Display, a supplier of iPhone screens that INCJ formed four years ago from the struggling screen units of Toshiba, Sony Corp. and Hitachi Ltd.

Corporate Backers

INCJ’s strategy in the home-appliance industry hinges on its bid for Sharp, and the fund may drop plans to purchase Toshiba’s white-goods business if its pursuit of Sharp isn’t successful, one of the people said. In addition to funds from the Japanese government, the investment company has corporate shareholders including Canon Inc., Hitachi, Panasonic Corp. and Sony, according to its website.

Negotiations with Sharp are continuing, a spokesman for INCJ said Tuesday, declining to comment on a potential bid for Toshiba’s white-goods business. Representatives for Sharp and Japan Display declined to comment. Yuu Takase, a Tokyo-based spokeswoman for Toshiba, said the company is in talks with several interested parties on the sale of its white-goods business and declined to comment further.

Competing Offers

State-backed INCJ has proposed to Sharp a package of cash, asset sales and lender support it says is worth 1 trillion yen, according to documents obtained earlier by Bloomberg. Foxconn is offering about 660 billion yen for the company, a person familiar with the matter has said. 

Foxconn Chairman Terry Gou emerged from a nine-hour meeting with Sharp last week and said his company has become the preferred bidder, with a final agreement expected by the end of the month. About an hour later, the Osaka-based company contradicted his comments, saying that INCJ’s bid is still in play.

Toshiba Chief Executive Officer Masashi Muromachi last week said his company will decide on the fate of its white-goods business by the end of February, which is when Foxconn’s bid for Sharp is set to expire.

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