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Foxconn reduces Sharp offer

Foxconn reduces Sharp offer

March 23, 2016

foxconnThe Taiwanese company is expected to “reduce its capital injection” by a large proportion.

Yahoo! Finance reported on the surprising development in the deal process, with Foxconn to reduce its offer “by around” $900 million (€804 million). It had initially planned to invest ¥489 billion ($4.3 billion/€3.8 billion) in the struggling OEM, but is now “likely to reduce” its funding. Foxconn is also planning to lower the price of new share offers from Sharp “while retaining the plan to [a] own two-thirds stake” in the OEM.

The OEM had accepted the buyout, worth $6.2 billion (€5.6 billion), but at the last minute Foxconn halted the acquisition for further talks. According to sources, this was because of “previously undisclosed liabilities”, and needing to clarify “new material information”. Other sources stated that Sharp has “contingent liabilities” worth around $2.7 billion (€2.4 billion), which “contrasts with Foxconn’s own due diligence” that had revealed a much lower amount.

However, earlier this month the deal was said to be back on, with Foxconn Chairman Terry Gou travelling to Japan to hold “late-stage talks” with Sharp executives, and “both sides [were] seeking to conclude”. As part of its new scrutiny of Sharp’s operations, Foxconn had “dispatched a team to Sharp’s headquarters, plants and other places”, and apparently “concluded that the contingent liabilities, which could be incurred in the future, do not pose a serious threat”.

The most recent developments had seen the deal in the balance, as Foxconn was “seeking guidance” from Sharp on its last quarterly performance as part of efforts to “finalise” the acquisition. Sources noted that “investors are on edge about prospects for the deal”, with concerns that it is “dragging out” affecting share prices, but Foxconn is said to be “unlikely to walk away given its deep desire to gain control of Sharp’s advanced screen technology”.

In January, Sharp denied rumours that it would be selling its copier business, whilst in November 2013 the OEM was rumoured to possibly be entering into an OEM deal with HP to make copiers, while further reporting established that both companies would collaborate on “toner and other supplies”. Also, in August 2013, Sharp called off talks with Samsung over potentially setting up a joint copier sales company following opposition from other Japanese OEMs.

Categories : City News

Tags : Business Foxconn Sharp

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