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Sharp, Foxconn stake talks may end next month
February 26, 2013
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TOKYO: Sharp Corporation’s talks with Taiwan’s Foxconn Technology Group over an investment in the Japanese electronics maker will probably end on March 26 without an agreement, two people familiar with the discussions said.

Negotiations haven’t led to a deal partly because the companies can’t agree on a price after Sharp’s shares declined, said one of the people, both of whom asked not to be named because the talks are private. The maker of Aquos televisions fell the most in two months, the biggest decline among companies in the Tokyo Stock Exchange’s first section.

Stumbling blocks in the talks also include management control and company strategy, one person said. Japan’s largest maker of liquid-crystal displays said in November talks might continue beyond March. Sharp is trying to raise funds as it forecasts a record full-year loss of 450 billion yen ($4.8 billion) amid slow demand for its panels and TVs.

Foxconn, founded by billionaire Terry Gou, initially agreed in March to buy a 9.9 per cent stake in Osaka-based Sharp for 550 yen a share. The deal foundered as Sharp’s shares plunged for seven straight months, reaching as low as 143 yen, and as Foxconn said it would renegotiate the price.

The Mainichi newspaper reported Feb.23 Sharp may suspend the share-sale talks, without saying where it got the information. The Sankei newspaper said the electronics maker is considering measures including a public share sale to raise capital by about 200 billion yen, without citing anyone.

Miyuki Nakayama, a Tokyo-based Sharp spokeswoman, said the company wasn’t the source of either report and that no decisions have been made on ending negotiations with Foxconn or on selling shares.

“Discussions are ongoing,” Louis Woo, a spokesman for Taipei-based Foxconn, said by phone on Feb.23. “We are not bound by any timetable.”

Hon Hai’s Chief Financial Officer Huang Chiu-lian said in June that the company’s plans to take a stake in Sharp faced resistance from management and board members of the Japanese company. Sharp’s managers “fear the company becoming a part of Hon Hai,” Huang said at the time.

Discussions over other types of cooperation and the possible sales of Sharp factories to the Taiwanese company may continue, the two people familiar with the talks said. Sharp sold a stake in an LCD factory in Sakai, central Japan, to Foxconn’s Gou in July.

Sharp is in talks with other companies on possible share sales and aims to include a deal in its medium-term business plan, which may be disclosed as early as next month, one of the people said.

The TV-maker agreed in December to sell as much as 9.9 billion yen of new shares to San Diego-based Qualcomm Inc. (QCOM) The US chipmaker has so far bought 4.9 billion yen as part of the two-step transaction.

Sharp dropped 6 per cent to 291 yen, headed for the biggest decline since Dec.25, in Tokyo. The benchmark Nikkei 225 Stock Average gained 1.7 per cent.

Sharp shares plunged 55 per cent to 303 yen last year amid widening loss forecasts. The company has reduced its workforce, sold assets and mortgaged its headquarters to refinance debt after posting a record 376 billion-yen net loss in the fiscal year ended March 31.

Bloomberg

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