Foxconn puts Sharp deal on hold

26 Feb 2016 | By Vijaya

Taiwan's Foxconn Technology Group said it will postpone signing a final agreement to acquire Japanese electronics maker Sharp.

Foxconn put out a statement raising questions about the final agreement.

It said, "After receiving new material information from Sharp ...we will have to postpone any signing of a definitive agreement until we have arrived at a satisfactory understanding and resolution of the situation."

In context: The Foxconn-Sharp takeover deal

Sharp History of Sharp Corporation

Sharp Corporation is a Japanese multinational corporation that designs and manufactures electronic products.

Headquartered in Osaka, the company was founded by Tokuji Hayakawa in 1912.

It operates through the following segments: Consumer/Information Products and Electronic Components.

The Consumer/Information Products segment produces audio-visual and communications equipment; health and environmental devices; and information devices while the Electronic Components segment offers LCDs, solar cells, and electronic devices.

About Foxconn Technology

Known formally as Hon Hai Precision Industry in Taiwan, Foxconn is best known for manufacturing the Apple iPhone in China. It engages in the manufacture, assembly, and sale of electronic equipment and products for the computer, communication, and consumer industries.
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Sharp Corporation in losses

Feb 2016Sharp Corporation in losses

Over the years, Sharp had been suffering deep losses. It owed ¥700 billion to its banks, not including other debt, like bonds.

It had a total debt of ¥1.07 trillion at the end of fiscal 2014.

On 25 Feb 2016, Sharp said its net loss in the three months through December more than doubled from a year earlier, to ¥25 billion.

Pursuit Previous acquisition attempt by Foxconn

Foxconn' s pursuit of Sharp goes back to 2012.

Foxconn's billionaire founder, Terry Gou, bought a minority share in an underused Sharp LCD factory in Japan in 2012.

Foxconn reached a deal to take a 10% stake in the Japanese company for ¥66.9 billion.

It later pulled out of the deal after dismal earnings led to a steep fall in Sharp's share price.

25 Feb 2016Sharp accepts Foxconn's offer

Japan's Sharp Corp agreed to a takeover by Taiwan's Foxconn in what would be the largest acquisition by a foreign company in Japan's technology sector.

The Taiwanese firm offered to invest ¥700 billion ($6.2 billion) in Sharp.

Foxconn's share purchase will give it control of 65.9 percent of Sharp.

Foxconn beat out the competition from Innovation Network Corp. of Japan for the deal.

26 Feb 2016Foxconn puts Sharp deal on hold

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What is the 'new material information'?

According to sources, "new material information" that emerged could be linked to huge losses on Sharp's balance sheet. The details of these losses as sent to Foxconn, include severance pay, breach-of-contract penalties and repayments of government funds. This amounts to $3.1 billion.

7 Mar 2016Foxconn-Sharp deal reaching a closing point

People familiar with Taiwan's Foxconn and Japan's Sharp Corporation deal said that the deal was "on the right track" after the last-minute obstacle over contingent liabilities that had caused delays the previous month.

Sharp shares shot up by almost 6%.

However, Foxconn said no definite date had been assigned for the deal as both sides were still making "progress towards an agreement".