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Foxconn plans to buy Sharp for $5 billion

Posted: 25 Jan 2016 ?? ?Print Version ?Bookmark and Share

Keywords:contract manufacturer? display technology? acquisition? product assembly?

Foxconn Technology Group, a Taiwan-based electronics contract manufacturer, made another offer to acquire struggling Japanese electronics maker Sharp Corp. for about $5.05 billion (600 billion yen), according to a Today report that quoted an unnamed source familiar with the deal. This could become the biggest buyout for the assembler of Apple's iPhones since 2009.

The person, who asked for anonymity as discussions are private, said a decision to reject or accept the offer may be made before this month ends. Foxconn's spokesperson Chu Wen-min declined to comment on the bid.

In 2012, the world's biggest electronics contract manufacturer offered to invest in Sharp, but the deal did not push through after both parties failed to agree on management control. Revival of the talks in the past year emerged apparently when Sharp turned to government-backed Innovation Network Corp of Japan (INCJ) seeking funds for a new round of debt payments.

According to data compiled by Bloomberg, the Osaka-based company as of Sept. 30 was burdened with total debt of about $6.7 billion (791.8 billion yen). Due to tough competition from Chinese and South Korean rivals, Sharp has accumulated over $9.2 billion (1.1 trillion yen) in losses over the past four financial years.

Foxconn plans to add a wider array of components to its offering in its bid to go beyond product assembly and logistics. For its part, Sharp could benefit from Foxconn's customers such as Apple, Xiaomi and Amazon.

"There need to be core products around which Sharp can build a market position. What those will be isn't clear, regardless of which side they join," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management in Tokyo, according to Today.

INCJ is currently ahead in taking over Sharp and has plans to combine its LCD business with rival Japan Display, in which the fund has a major stake, according to Reuters' sources. INCJ also intends to merge Sharp's home appliances business with Toshiba's, according to the same sources.

Government officials told Reuters that they would rather let a Japanese buyer acquire Sharp because they want its display technology to remain in the country.

"We're talking with several companies about the structural improvement of liquid-crystal-display business. We don't comment on the details of individual talks," said Sharp spokesperson Yoshifumi Seki, according to Reuters.

- Stephen Padilla

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