Sharp, Foxconn Push to Close Deal After a Month of Delays

Sharp Corp. Headquarters As Foxconn Chairman Terry Gou Said To Plan Appeal On Deal

A cameraman films the Sharp Corp. headquarters in Osaka, Japan on Friday, Feb 5, 2016.

Photographer: Buddhika Weerasinghe/Bloomberg
  • Foxconn may discuss the deal at board meeting on March 30
  • Sharp says it aims to reach agreement as soon as possible

Sharp Corp. and Foxconn Technology Group said they are pushing to close the rescue deal for the Japanese manufacturer that has been held up by disagreement for more than a month.

Hon Hai Precision Industry Co., Foxconn’s flagship company, said on Sunday it will hold a board meeting on March 30 as scheduled, where it may discuss the Sharp deal depending on the stage of negotiations, according to a statement to the Taiwan stock exchange. Sharp said today it aims to reach the agreement as soon as possible, and will promptly make information public if it reaches a decision requiring disclosure.

Sharp’s banks are ready to push back the deadline for most of the company’s 510 billion yen ($4.5 billion) in loans and credit lines beyond March 31, people with knowledge of the matter said earlier. That would give the Japanese maker of Aquos televisions more time to reach a renegotiated deal to be acquired by billionaire Terry Gou’s Foxconn. Sharp shares climbed the most in three weeks in Tokyo on Monday.

“Some investors were beginning to fear that Foxconn was going to walk away from the deal,” said Masahiko Ishino, an analyst at Tokai Tokyo Securities. “The shares are rebounding on renewed confidence that the investment seems on track.”

Sharp, along with the banks, is aiming for its directors to endorse a final proposal by March 31, one person has said, although the board could meet for a vote earlier if a deal is presented. At the same time, an extension by the banks would give Sharp more time to negotiate a final agreement in April.

The shares of Sharp rose 4 percent to 131 yen at the close in Tokyo, their biggest jump since March 7. The Nikkei 225 Stock Average advanced 0.8 percent.

The extension may be as long as a month, said the people, who asked not to be identified as the decision hasn’t been publicly announced. Gou agreed a month ago to buy Sharp for more than 600 billion yen, but has held off on signing a final agreement while his advisers scrutinize the company’s finances.

Foxconn is seeking to cut the amount it will pay for equity in Sharp to about 389 billion yen, one person familiar with the matter has said. The Taiwanese company will probably still pay about 100 billion yen for preferred shares that the banks own, though the payment may be delayed, the person said.

Finish Line

More than a month has passed since Sharp’s board backed Foxconn’s bailout over a competing offer from Innovation Network Corp. of Japan. In the interim, Foxconn’s Gou put the brakes on the deal while he seeks more clarity on Sharp’s performance in the current quarter, people familiar with the matter have said

A reduction in the value of Foxconn’s offer would put it closer to the bid from INCJ. The Japanese government-backed investment fund had offered about 300 billion yen for Sharp, all of which would have been put into the company through the purchase of additional shares.

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