BackSharp agrees to Foxconn’s reduced buyout offer after wrangling
Foxconn is paying 389 billion ($3.5 billion) for a controlling stake in Sharp
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Tokyo: Foxconn Technology Group chairman Terry Gou finally clinched a deal to buy Sharp Corp. after years of pursuit, bringing together the main assembler of Apple Inc.’s iPhones with the electronics maker that built Japan’s first television sets.
The parent of Hon Hai Precision Industry Co. is paying ¥389 billion ($3.5 billion) for a controlling stake in Sharp, both companies said in statements on Wednesday. Foxconn and its affiliated companies are taking a 66% stake in Sharp, paying ¥88 per common share.
The deal’s consummation caps weeks of drama, when the acquisition repeatedly looked like it could fall apart. Gou had appeared on the verge of grasping his prize a month ago, when Sharp’s board chose Foxconn over a rival bid from the state- backed Innovation Network Corp. of Japan. But after learning about liabilities at Sharp, Gou pushed back the final agreement until this week to negotiate a lower price.
Gou is seeking to broaden Foxconn’s remit, transforming the contract manufacturer into a company that will not only make key components and assemble devices, but also sell electronics products to consumers. The billionaire’s pursuit of Sharp stretches back to 2012, when he offered to buy shares at ¥550 apiece in a deal that was never completed.
Sharp’s stock rose 3.9% to 135¥ at the close in Tokyo before the announcement. Sharp said it now expects an operating loss of ¥170 billion for the fiscal year ending on Thursday, compared with an earlier forecast for a profit of ¥10 billion.
The sale of an iconic Japanese brand to the Taiwanese company is rare in a country where struggling companies have long been able to rely on the government and banks for support. Up until a month ago, the government buyout fund was in contention to acquire Sharp, which was saddled with debt and struggling with chronic losses. Sharp deemed at the time that the offer from Foxconn was superior. Bloomberg
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