Sharp accepts Foxconn takeover bid

Taiwan’s Foxconn put its takeover of electronics maker Sharp on hold on Thursday after it said it had received “new material information” from the Japanese company, throwing into doubt what was set to be the biggest takeover by a foreign firm in Japan’s technology sector.

Under the buy-in deal, Hon Hai, known as Foxconn outside Taiwan, has promised that Sharp will remain independent after the acquisition, while the Japanese firm will continue to use the Sharp brand under the new ownership.

In a unanimous vote, Sharp’s board made the decision to accept Foxconn’s offer.

Century-old Sharp – which supplies smartphone and tablet screens to Apple – has teetered on the edge of bankruptcy for years, piling up eye-watering losses and struggling through a restructuring plan that has yet to pull it out of the red.

Both Foxconn and Sharp have declined to comment on the issue.

The largest takeover of a Japanese technology firm by a foreign company is hanging in the balance.

In its latest statement, Foxconn said: “We already notified Sharp on the same day that our side had to clarify the contents [in the list]”.

Investors in Sharp were also unimpressed by the plan, which will involve the Japanese company issuing more than 3 billion new shares at a significant discount to the stock’s current price on the Tokyo exchange. Sharp posted a loss of $1.9 billion previous year, due to which it had to cut its workforce by 10%.

The company also said this month that its board of directors had agreed on a capital investment to increase production capacity and focus on small- and medium-size high-value added LCD panels at its Kameyama Plant No. 2. Foxconn assembles various electronics products, including smartphones for Apple.

Sharp was once a market leader in manufacturing displays, but the company has been in the line of fire as its displays lost the market share in Asia, while its mobile sales also decreased in Japan.

Potentially bringing its own parts to the table, should it fully acquire Sharp, could be beneficial to Foxconn on a number of levels.

Sharp had faced a choice between Hon Hai’s takeover bid and support from the Innovation Network Corp. of Japan, a state-backed fund.