Sharp has confirmed talks with Hon Hai Precision Industry and Innovation Network Corp of Japan on a possible investment in order to support the restructuring of its LCD panel business. The companies are in negotiations, and Sharp said it aims to pick a definitive partner in around a month.
According to the latest media reports, Hon Hai, the owner of Foxconn, has offered the most to Sharp, with a capital injection that would give it around two-thirds of Sharp's shares. However, the Japanese state is pushing its own vehicle, the Innovation Network Corp, which has invested in other Japanese tech companies in an effort to maintain the local industry.
Following the announcement, Sharp CEO Kozo Takahashi said that the Foxconn offer was more attractive than the fund’s proposal. He cited potential synergies and the scale of Foxconn, the biggest maker of iPhones, the Wall Street Journal reported. “The two offers are not equal,’’ Takahashi said after a board meeting to check on the progress of the bids. "We are currently devoting more resources to checking Foxconn’s offer,"’ he said, though Sharp will also maintain a dialogue with INCJ.
The announcement came alongside Sharp's latest quarterly results, showing revenues down 13.0 percent year-on-year to JPY 663 billion. The net loss for the three months to December doubled to JPY 24.7 billion from JPY 11.9 billion a year ago, and the operating result was a loss of JPY 3.8 billion versus a profit of JPY 22.0 billion a year earlier. Sharp's cash position improved compared to September 2015 to JPY 234.5 billion, while net debt fell slightly to JPY 521.9 billion.
Separately, Sharp also announced an investment of JPY 11.2 billion to increase production at its Kameyama Plant No. 2. This will increase production of high-end small and medium-sized panels used in PCs and tablets. The extra capacity should be ready by January 2017.
