Hon Hai proposes deal to buy Sharp
TAIPEI — Hon Hai Precision Industry Co. (鴻海), the world’s largest contract electronics maker, has proposed to spend 300 billion Japanese yen (US$2.5 billion) to acquire financially struggling Japan-based electronics firm Sharp Corp., according to Japan’s Kyodo News.
The report posted by the Japanese news outlet Friday said that the proposed acquisition price is about 50 percent higher than Sharp’s current market value, indicating that Hon Hai wants to use the good offer to gain the upper hand and win consensus from the Japanese firm during negotiations for the acquisition.
According to the report, while Hon Hai, known as Foxconn outside Taiwan, has proposed to acquire Sharp at such a high premium, the Taiwanese firm requires the current management of Sharp, including Sharp President Kozo Takahashi, to step down.
Hon Hai will send a team to Sharp to control the Japanese firm’s management, the report said.
In addition to the acquisition price, Hon Hai plans to take over the debt shouldered by Sharp to help the Japanese firm address its pressing financial problems, the report said. But the report said that Hon Hai has not talked with Sharp’s bank creditors yet.
The report said that Sharp was shouldering about 760 billion yen in debt as of the end of September.
Hon Hai is not the only potential suitor seeking to acquire Sharp, the report went on, adding that the Innovation Network Corporation of Japan (INCJ), which is sponsored by the Japanese government, is studying a buy-out deal to buy Sharp.
The report said that the INCJ still needs some time to map out a concrete acquisition deal for Sharp, and the proposal is unlikely to come out until 2016, so Hon Hai is taking advantage of the vacuum created by INCJ to make a deal for Sharp.
According to the report, the INCJ is discussing whether it will spin off Sharp’s LCD production operations after its buy-in deal and then integrate the operations with the INCJ’s small and medium-sized flat panel unit Japan Display Inc. (JDI). The INCJ currently owns a 35 percent stake in JDI.
Although Hon Hai proposed 300 billion yen to acquire Sharp, the Kyodo News report said, the Taiwanese firm’s previous proposal to raise its stake in Sharp’s flat screen plant Sakai Display Products (SDP) in Osaka’s Sakai City is still valid.
In July 2012, Hon Hai Chairman Terry Gou, in a personal capacity, acquired a 37.6 percent stake in the advanced display panel plant from Sharp, which now holds a 37.6 percent share.