Taiwan’s Hon Hai leads in Sharp rescue talks

It would choose Hon Hai over public-private fund Innovation Network Corporation of Japan, which has offered to invest around 300 billion yen in Sharp in a scheme that would also involve assistance from its creditor banks. The century-old Osaka-based electronics maker has suffered deep losses after its consumer-electronics business declined and it faced tougher competition in the display panels it sells to smartphone makers. The possibility of a government bailout first surfaced in 2012, when Sharp teetered on the brink of bankruptcy after its Aquos TVs lost market share to those from Samsung Electronics Co., LG Electronics Inc. and lower-cost Chinese rivals.

Company executives and other insiders outnumber outside directors on Sharp’s board by 8 to 5, so they could easily outvote the outsiders. “INCJ’s deal will also entail some restructuring”. Sharp plans to give preference to Foxconn, NHK reported earlier without citing anyone. The screen is one of the most expensive components in smartphones.

Foxconn Technology Group, which assembles most of the world’s iPhones, initially offered about $5.3bn to take over Sharp before raising this to $5.9bn.

The INCJ plan reportedly called for hiving off Sharp’s LCD business and merging it with Japan Display, while the Foxconn offer would allow the firm to continue operating as a single entity.