Red faces, raised voices over late hitch in Foxconn's Sharp deal
By Makiko Yamazaki and J.R. Wu
TOKYO/TAIPEI (Reuters) - A late hitch to Foxconn's takeover of Japan's struggling Sharp Corp (6753.T: Quote) brought simmering distrust between the two close to boiling point, people with direct knowledge of the matter said.
The two companies have eyed each other warily since Foxconn founder and billionaire Terry Gou pulled out of a planned capital tie-up and strategic partnership with Sharp in 2012.
Missteps in communication last week, when Sharp's board met and announced a decision to sell a two-thirds stake to the Taiwanese group, ratcheted up tensions, upsetting Gou and causing embarrassment at Sharp.
On the eve of that board meeting, Foxconn had asked Sharp to delay voting on a deal as it had just received "new material information" from Sharp that it hadn't seen before and needed to clarify.
"It seemed Sharp simply ignored Foxconn," said one individual familiar with Foxconn's take on the matter.
The information listed around 300 billion yen ($2.66 billion) in contingent liabilities at Sharp. The list was pulled together by working level officials at Sharp and forwarded, without top officials seeing it, to Foxconn as a goodwill gesture to make the buyer aware of worst-case scenario risks, sources said. They were not liabilities that required formal disclosure.
It didn't go down well on the Taiwan side.
"They felt violated," said a person briefed on the issue. Another person said Gou shouted at his team for not having discovered these liabilities in the first place. Continued...