Foxconn Gets Chinese Green Light for Sharp Deal

Foxconn Gets Chinese Green Light for Sharp Deal

Hon Hai gains Sharp's cutting-edge LCD panel technology with the $3.5-billion buyout, giving it a 66% controlling stake.

Taiwanese tech giant Hon Hai said antitrust authorities in China had approved its takeover of ailing Japanese electronics maker Sharp, clearing the last obstacle to the drawn-out deal.

The purchase, which was supposed to close last month, has reportedly been held up by China -- one of the countries that was reviewing the deal over concerns that it could lead to a monopoly on LCD screens.

Hon Hai gains Sharp's cutting-edge LCD panel technology with the $3.5-billion buyout, giving it a 66% controlling stake.

"Our application for antitrust review in various regions is completed," the company said in a statement to the Taiwan stock exchange on August 11.

Both sides will carry out the handover procedures as soon as possible according to the contract," it said.

The announcement fulfills an ambition of Hon Hai founder Terry Gou, whose firm first pursued Sharp four years ago.

Gou's company -- also known as Foxconn -- is the world's biggest electronics supplier, with Apple a key customer for smartphone components.

But the smartphone giant is squeezing its suppliers as sales of its iPhones slow, dropping 15% last quarter year-on-year.

Hon Hai shares slumped in Taipei Friday on weaker-than-expected quarterly earnings.

"From the results, we can see that Apple is pressuring its supply chain on prices," Fubon analysts led by Arthur Liao said in a note.

Hon Hai said on August 11 that its net profit dropped 31% to Tw$17.7 billion (US$565 million) in the April-June period, the third straight quarterly decline.

It missed the Tw$24.6 billion estimate by analysts polled by Bloomberg News.

Analysts are expecting better performance in the third quarter, when Apple's new iPhone 7 series is rumored to be launched.

Copyright Agence France-Presse, 2016

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