Foxconn agrees to buy Sharp after slashing original offer

Wed Mar 30, 2016 7:52am EDT
 
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By Makiko Yamazaki and J.R. Wu

TOKYO/TAIPEI (Reuters) - Taiwan's Foxconn agreed to acquire Japan's Sharp Corp (6753.T: Quote) at a big discount to its original offer, capping a month of wrangling that sowed more doubt over whether the two companies can work well together and fend off fierce competition from rivals.

Foxconn, formally known as Hon Hai Precision Industry Co (2317.TW: Quote), will pay about $3.5 billion for a two-thirds stake, cutting its initial offer by nearly $900 million following the emergence of previously undisclosed liabilities at Sharp.

The deal marks the largest acquisition by a foreign company in Japan's insular tech industry and the end of independence for a 100-year-old company that started out making belt buckles and mechanical pencils.

It also gives the world's top electronics contract manufacturer control of Sharp's advanced screen technology which it does not have, and helps strengthen its pricing power with major client Apple Inc (AAPL.O: Quote).

Under the revised terms, Foxconn will pay 88 yen per Sharp share, the companies said in a statement, a 35 percent discount to Wednesday's close and likely reflecting in part Chinese obsession with the lucky number eight.

Foxconn has also agreed to buy all 200 billion yen ($1.7 billion) worth of preferred shares owned by Sharp's two main creditor banks, a source familiar with the matter said on Wednesday.

It also has the option of increasing its stake in Sharp next year.

The firms had been on the verge of finalizing terms last month when contingent liabilities at Sharp were suddenly revealed, causing Foxconn to hit the pause button on the deal.   Continued...

 
A man using his mobile phone walks past Sharp Corp's liquid crystal display monitors showing the company logo in Tokyo, Japan, March 30, 2016. REUTERS/Yuya Shino