Foxconn agrees Sharp takeover for JPY 389 billion

News IT Global 30 MRT 2016
Foxconn agrees Sharp takeover for JPY 389 billion
Sharp and Hon Hai Precision Industry have reached agreement on the latter's investment in Sharp. An initial agreement was first announced at the end of February, and it took a month for the companies to agree to the final terms. Under the deal, Hon Hai and its unit Foxconn will subscribe to JPY 288.8 billion in new common shares issued by Sharp, giving the Taiwanese company a 66 percent stake. The price per share is JPY 88, a significant discount to Sharp's more recent range of around JPY 130 and the original agreement of JPY 118 per share.

Hon Hai will also acquire JPY 100 billion in new class C preferred shares in Sharp. These can be converted at a ratio of 1:100 from 01 July 2017. The company will pay an initial deposit of JPY 100 billion towards the shares, pending approval by shareholders in June of the full deal. If the share subscription does not go ahead, Sharp may keep the deposit. 

Under the previous deal announced in February, Hon Hai was expected to buy JPY 489 billion in new shares issued by the company and 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 announced that it has agreed an extension of one month on repayment of its JPY 510 billion in loans with the banks. These will now fall due 30 April, rather than 31 March. 

In addition, Sharp confirmed a cut in its sales forecast for the year to 31 March, to JPY 2.45 trillion from JPY 2.70 trillion. That's down from a reported JPY 2.79 billion in fiscal 2015. It also now expects to report an operating loss of JPY 170 billion, compared to a previous forecast for a profit of JPY 10 billion and a loss of JPY 48 billion last year. The reason for the downgrade is a decline in LCD sales and prices, operating losses from low factory utilization and a writedown of inventories. Sharp said sales slowed in the fourth quarter, both in China and its home market for certain products. 

Categories:

IT,  Mobile

Companies:

Sharp,  Foxconn,  Hon Hai Precision Industry

Regions:

Global

Tags:

Components, Devices, Financial figures, Financial funding, M&A buyouts & divestments

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