Sharp chooses Foxconn as preferred bidder over Japan fund: sources
By Taro Fuse and Makiko Yamazaki
TOKYO (Reuters) - Sharp Corp has chosen Taiwan's Foxconn as its preferred bidder in takeover talks, sources with knowledge of the decision said, paving the way for the biggest acquisition by a foreign company in Japan's insulated technology sector.
Foxconn, known formally as Hon Hai Precision Industry Co, offered to invest around 700 billion yen ($5.9 billion) in the struggling electronics maker, one of the sources said.
That was more than double the amount proposed by a state-backed fund, the Innovation Network Corp of Japan (INCJ). While a generous Foxconn offer had been flagged, many investors were surprised to see an overseas firm gain the upper hand over a state fund and Sharp's shares shot up 17 percent.
Sharp Chief Executive Kozo Takahashi confirmed the company was focusing on talks with Foxconn, although he denied having officially designated the Apple Inc supplier as preferred bidder.
He stressed, however, that Sharp and Foxconn had forged a good relationship through the joint management of a plant in Japan, moving on from a breakdown in a 2012 agreement to form a strategic alliance and capital ties.
"The biggest thing is that we have built up a relationship of trust," he told an earnings briefing. "It's true things happened, but there is extreme respect."
A takeover by Foxconn, which assembles various electronics products such as smartphones and television sets for Apple, Sony Corp and many other major international companies, would vastly expand sales channels for Sharp's liquid crystal display (LCD) panels.
The decision comes after months of uncertainty over the fate of the company, whose display panel business has continued to suffer massive losses despite two major bailouts by its banks in the last four years. Continued...