Sharp agrees to Foxconn takeover

News IT Global 25 FEB 2016
Sharp agrees to Foxconn takeover
Sharp has agreed to a takeover bid from Taiwan's Hon Hai Precision Industry. Hon Hai, better known as Foxconn, is expected to acquire a majority stake in Sharp by buying JPY 489 billion in new shares issued by the company. In addition, Hon Hai plans to purchase half of the shares held by Sharp's creditors Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ, for a total amount of JPY 100 billion. 

Sharp chose Foxconn's takeover bid over support from the Innovation Network Corp of Japan, a state-backed fund. Sharp said the offer from Foxconn included a pledge to invest in expanding its LCD business, and the company can also benefit from Foxconn's expertise in manufacturing. The two also have complementary operations, serving similar customers and already running together the LCD joint venture Sakai Display Products. 

In addition, Foxconn pledged to allow Sharp operational independence, including its brand, unified operations and R&D in Japan, and to maintain employment at the company. Foxconn also agreed to a two-year standstill on acquiring more Sharp shares or selling the shares to a third party without Sharp's approval. In return, Hon Hai will have a majority of seats on Sharp's board. 

Sharp said the agreement will allow it to realise the goals of its medium-term strategic plan, including necessary capital expenditure for growing its business and paying off debt coming due. Hon Hai will make an initial JPY 100 billion deposit towards the share issue, which Sharp may keep if the full deal does not go ahead.

Categories:

IT,  Mobile

Companies:

Sharp,  Foxconn,  Hon Hai Precision Industry

Regions:

Global

Tags:

Components, Devices, M&A buyouts & divestments

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