Hon Hai Seals Sharp Takeover for 35 Billion Sharp USA

Sharp's AQUOS 4K Ultra HD Series TV.

Hon Hai Seals Sharp Takeover for $3.5 Billion

"We are committed to restoring profitability and strengthening operations to once again make Sharp a leader in the global electronics arena and a world-class company with a positive outlook," the companies said.

Taiwan's tech giant Hon Hai (IW 1000/23) said on March 30 it had finally sealed a takeover of Japanese electronics maker Sharp in a "historic" deal worth 389 billion yen (US$3.5 billion).

It is the first foreign acquisition of a major Japanese electronics firm and comes after weeks of delays, with Hon Hai buying a 66% controlling stake.

But the cash injection from Hon Hai -- the multinational owner of Foxconn, the world's biggest iPhone and iPad assembler -- is well down from the original 489 billion yen put on the table in February.

Hon Hai put the brakes on the takeover last month, soon after it was first announced, to review new information from Sharp believed to relate to the company's sizeable liabilities.

Hon Hai's colorful founder Terry Gou said he was "thrilled" by the "strategic alliance."

"We have much that we want to achieve and I am confident that we will unlock Sharp's true potential and together reach great heights," he said in a joint statement.

Sharp's president and CEO Kozo Takahashi added that the move would merge forces and "accelerate innovation."

'Historic strategic alliance'

The joint statement, issued at a news conference in Taipei, described the takeover as an attempt to revive Sharp's flagging fortunes and called it a "historic strategic alliance."

"We are committed to restoring profitability and strengthening operations to once again make Sharp a leader in the global electronics arena and a world-class company with a positive outlook," it said.

Hon Hai will pay 88 yen per share. A spokesman said the deal would be signed in Osaka on April 2. The takeover must still be approved by Taiwan's Investment Commission, which said it would rule on the acquisition within a month of receiving the application for the purchase.

The deal is set to be the fourth largest overseas investment by a Taiwanese company, the commission reported.

The two firms have worked together on large-screen technology, including for televisions, and jointly operate a liquid crystal display (LCD) panel plant in Japan. Still, the Japanese government had reportedly been concerned about Sharp's key technologies falling into the hands of a foreign firm.

Sharp is still a leader in LCD technology and remains one of Japan's best-known corporate brands overseas despite its bleeding balance sheet. But the century-old company piled up eye-watering losses after the 2008 global financial crisis and a restructuring plan has yet to pull it out of the red.

In February Sharp said its net loss in the April to December period came in at a whopping 108.3 billion yen, way up from the year before.

"For Sharp, this is the first step toward normalization and it will make the company a buy for investors again," said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo.

"This deal proves that Japanese electronics firms are still attractive for foreign rivals.

"Sharp has competitive know-how and technologies. For Hon Hai, it's a good buy. It wanted a brand for finished products and it can make use of the Sharp name," Yasuda said.

Taiwan's Fubon Securities said Hon Hai would be able to manage Sharp's losses. "This deal will be positive for both Hon Hai and Sharp. The former's integration of Sharp's panel technology will help the latter improve its factory utilization," it said.  

Copyright Agence France-Presse, 2016

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish