Foxconn Takes Controlling Interest in Sharp in Reduced Buyout

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After months of speculation, and a last-minute delay, Bloomberg News reports that Foxconn has finally acquired Sharp Corporation of Japan.

Foxconn Technology Group, the parent company of Taiwan’s Hon Hai Precision Industry, is paying 389 billion yen ($3.5 billion) for a controlling stake in Sharp. A month ago, Foxconn had originally agreed to pay 489 billion yen for Sharp.

Foxconn and its affiliates will get a 66-percent share of Sharp for 88 yen per share, both Foxconn and Sharp said in statements today.

“Finally, it’s decided,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “This is positive for Sharp, although it’s hard to imagine that Foxconn won’t have to keep providing funds.”

A month ago, Sharp’s chose Foxconn over a rival bid from the government-backed Innovation Network Corp. of Japan, but Foxconn, after learning of additional Sharp debt, backed away from the deal in order to negotiate a lower price.

The agreement also includes a new clause enabling Foxconn to buy Sharp’s LCD display business if the deal falls apart anytime before October 5th. If that happens, Sharp will give Foxconn, or a third party designated by Foxconn, exclusive negotiation rights for three months to buy its LCD display business.

According to Bloomberg News, two directors on Sharp’s 13-member board voted against the revised agreement, while the previous deal had won unanimous board support.

Foxconn Group Chairman Terry Gou is said to be seeking to transform Sharp from a contract manufacturer into a company that will not only make key components and assemble devices, but also sell electronics products to consumers.

“We have much that we want to achieve and I am confident that we will unlock Sharp’s true potential and together reach great heights,” Gou said in a statement.

Sharp also said it expects to report an operating loss of 170 billion yen for its fiscal year that ends on March 31, 2015. Previously it had said that it had expected a profit of 10 billion yen. Sharp also that its two main banks, Mizuho Financial Group and Mitsubishi UFJ Financial Group, will extend their deadline for the payment of 510 billion yen in loans and credit lines by a month.

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