Foxconn Reportedly Makes $5.1 Billion Bid for Sharp Corporation

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Bloomberg News reports that Taiwan’s Foxconn – which also goes under the name Hon Hai  and is the world’s largest contract manufacturer – has offered about 600 billion yen ($5.1 billion U.S.) to buy Sharp Corporation of Japan, according to “a person familiar with the talks.”

According to sources cited by Bloomberg, Sharp will decide whether to accept or reject the bid by the end of January.

Chu Wen-min, a spokesman for Foxconn’s Hon Hai Precision Industry, declined to comment.

According to Bloomberg, Foxconn offered to invest in Sharp in 2012, “but discussions foundered after they failed to agree on management control.” However, discussions were revived in last year after Sharp turned to the Japan-government-backed Innovation Network of Japan for funding as a new round of debt payments loomed. In 2012, Foxconn reportedly had offered 66.9 billion yen for a 9.88 percent stake in Sharp.

Foxconn is reportedly interested in expanding its business beyond assembly of products and logistics by adding a broader array of components to its offerings. Sharp is one of the world’s largest makers of displays for smartphones and tablets, and, according to Bloomberg, “could gain more business from Apple and other Foxconn customers like Amazon.com Inc and Xiaomi Corp.”

“There need(s) 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. “Outside of short-term speculators, most investors will stay away from Sharp’s shares until the final details are settled.”

Sharp has a total debt of 791.8 billion yen as of September 30, 2015, according to data compiled by Bloomberg, and has recorded more than 1.1 trillion yen in losses over the past four financial years

Last week, Reuters reported that a $3 billion restructuring plan for Sharp was in the works. Under the restructuring plan, the Japan government’s Innovation Network Corporation of Japan (INCJ) would invest more than 200 billion yen ($1.7 billion) into Sharp. This would be the third time in three years that INCJ has contributed investment into Sharp.

Sharp is also reportedly asking the Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank to convert about 150 billion yen ($1.3 billion) of existing loans into preferred shares. Sharp received approximately $1.7 billion in aid in May 2015, but since then reported losses in both August and November 2015.

More Resources

January 2016: Sharp: Won’t Sell Copier Business; $1.3 Billion Bailout May Be in the Works

November 2015: Loss for Sharp’s Second Half, but Business Solutions’ Sales Up 3.8 Percent

August 2015: Sharp Reports Net Loss of $274 Million; MFP Sales Steady; Will Exit TV Business in Americas

May 2015: Banks to Provide Sharp with $1.7 Billion Bailout, Layoffs in the Works, Reports Loss for Fiscal Year

May 2015: Sharp Said to be Seeking Financial Assistance from Government-Backed Fund

April 2015: Sharp Says it Currently has No Plans to Spin-Off LCD Business

March 2015: Sharp to Cut Some 6,000 Jobs from Global Workforce as Part of Restructuring

March 2015: Sharp President to Ask for More Funds from Lenders

February 2015: Sharp Falters with Latest Financial Results, but MFP Business Sees Gains

January 2015: Sharp Sells U.S. HQ in Mahwah, but Will Lease Site to Stay There

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