Foxconn Said to Offer About $5.1 Billion for Japan’s Sharp

Updated on
  • Result of offer, rejected or accepted, may come by end January
  • Japan's INCJ also reported to be interested in Sharp deal

An employee uses a remote control as he inspects a Sharp Aquos LCD television. Foxconn has offered about $5.1 billion to buy Japan’s Sharp Corp.

Photographer: Tomohiro Ohsumi/Bloomberg

Foxconn Technology Group has offered about 600 billion yen ($5.1 billion) to buy struggling Japanese electronics maker Sharp Corp., according to a person familiar with the talks, in what could mark the largest acquisition since 2009 for the assembler of Apple Inc.’s iPhones.

A decision to accept or reject the bid is expected before the end of January, the person said, asking not to be identified as the discussions are private. Chu Wen-min, a spokesman for Foxconn’s Hon Hai Precision Industry Co., declined to comment Thursday.

The world’s largest electronics contract manufacturer offered to invest in Sharp in 2012 but discussions foundered after they failed to agree on management control. Talks were said to have been revived in the past year after Sharp turned to government-backed Innovation Network Corp. of Japan, or INCJ, for funding as a new round of debt payments loomed.

Foxconn is interested in expanding its business beyond assembly of products and logistics, by adding a wider array of components to its offerings. Sharp, one of the world’s largest makers of displays for smartphones and tablets, could gain more business from Apple and other Foxconn customers like Inc and Xiaomi Corp.

“There need to be core products around which Sharp can build a market position. What those will be isn’t clear, regardless of which side they join,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co. in Tokyo. “Outside of short-term speculators, most investors will stay away from Sharp’s shares until the final details are settled.”

The Alternatives

The Japanese company’s shares surged as much as 25 percent in Tokyo. They closed Thursday 6 percent higher, taking its market value to about 218 billion yen. The stock dropped 53 percent last year and 20 percent in 2014.

Sharp was saddled with total debt of 791.8 billion yen as of Sept. 30, according to data compiled by Bloomberg. The Osaka-based company has booked more than 1.1 trillion yen in losses over the past four financial years as stiffer competition from South Korean and Chinese rivals undercut its business.

Apart from Foxconn, it’s now also pondering a competing bid from INCJ, the Wall Street Journal reported earlier, citing unidentified people familiar with the matter.

“We’re talking with several companies about the structural improvement of liquid-crystal-display business. We don’t comment on the details of individual talks,” said Yoshifumi Seki, a spokesman for Sharp.

In 2012, Foxconn had offered 66.9 billion yen for a 9.88 percent stake in Sharp. At $5.1 billion, a full takeover of Sharp would be the largest for Terry Gou’s Foxconn group since the 2009 acquisition by display-making unit Innolux Corp. of Chi Mei Optoelectronics Corp. for $5.3 billion plus debt.

— With assistance by Pavel Alpeyev, and Takashi Amano

(Updates with details of Foxconn deals from seventh paragraph.)
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