March 18, 2016
The Taiwanese company is still “seeking guidance” on Sharp’s last quarterly performance, with no official deal leaving investors “on edge”.
The OEM had accepted Foxconn’s buyout, worth $6.2 billion (€5.6 billion), but at the last minute the latter halted the acquisition for further talks. According to sources, Foxconn halted the takeover because of “previously undisclosed liabilities”, and needing to clarify “new material information”, though the company refused to elaborate any further. 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 has apparently “concluded that the contingent liabilities, which could be incurred in the future, do not pose a serious threat”, with this analysis “expected to wrap up soon”.
Despite the optimism, Reuters has now reported that Foxconn is “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, and a deal “may not happen this week”, but Foxconn is said to be “unlikely to walk away given its deep desire to gain control of Sharp’s advanced screen technology”.
Reuters also highlighted a “history of mutual distrust” between the two companies “dating back to a failed deal in 2012”, which “lingers between the two” and raises questions “about how successful the acquisition will be, even if completed”. Foxconn refused to comment, while Sharp stated that both are “working hard to reach a satisfactory agreement as soon as practically possible”. Foxconn is also waiting for its scrutiny of Sharp’s accounts to see if the liabilities are “in the right ballpark”.
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.
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