August 24, 2016
The Recycler recently reported that the acquisition of Sharp by Foxconn had gone through “after years of pursuit” in a “reduced buyout”, with Chinese authorities approving the deal. Times of India has now reported that as “a part of Foxconn”, Sharp will “review its TV brand licensing deals overseas in an effort to boost its global presence”, releasing a statement noting that “we have decided to review our current brand licensing business in Europe and Americas, and are currently examining various possibilities”.
This had followed Japanese media reports that Sharp would “dispatch officials next month for negotiations to buy back its TV business in the United States and Europe”, having “effectively exited the money-losing TV business” in both markets and licensing the brand to the Chinese Hisense Group in the USA, and Universal Media Corp Slovakia in Europe. It had chosen to withdraw from the TV business to help “trim its losses” earlier this year, but believes it can “make profits” after the acquisition.
Its perspective is said to be that by “taking advantage of Foxconn’s procurement power in the supply chain” and “its vast network of clients”, the business can become profitable. Previously, Foxconn had reduced its offer to buy Sharp “by around” $900 million (€804 million), having initially planned to invest ¥489 billion ($4.3 billion/€3.8 billion) in the struggling OEM.
The completed deal saw Foxconn acquire a controlling stake in Sharp for ¥389 billion ($3.4 billion/€3 billion), and it will get 66 percent of the OEM for ¥88 ($0.78/€0.69) per share, capping “weeks of drama” as the acquisition stumbled. The OEM had accepted the buyout, 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 had “contingent liabilities” worth around $2.7 billion (€2.4 billion), which “contrast[ed] with Foxconn’s own due diligence” that had revealed a much lower amount.
However, the deal was then 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”.
Later developments had again 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.
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