Taiwan's Foxconn to Receive 65.9% of Sharp / D. Abramov / Vedomosti

Japanese corporation Sharp has announced that it has accepted a takeover offer from Taiwan's Foxconn (formally known as Hon Hai Precision Industry), the BBC reports . This was previously reported by Japanese and international media, citing informed sources. The official statement was made after a two-day meeting of Sharp's board of directors, where the terms of the deal were discussed. Sharp will issue new shares worth approximately $4.4 billion and transfer them to Foxconn, Reuters reports . As a result, the Taiwanese company will control 65.9% of Sharp, Bloomberg notes , and this will be the largest deal to buy a stake in a Japanese IT company. According to a Reuters source, Foxconn is committed to investing more than 650 billion yen ($5.8 billion) in the deal and in Sharp.

A few hours after Sharp's statement was published, Foxconn said it was suspending the signing of the agreement. The company received some information from its Japanese partner that requires clarification of certain details in the agreement, Reuters reports .

Foxconn, which assembles iPhones, among other things, initially offered $5.3 billion for Sharp, but then raised the price to $5.9 billion, the BBC recalls. According to Nikkei Asian Review, Foxconn's final offer was $6.2 billion.

Sharp was founded in 1912. In the second half of the 20th century, it became one of the world leaders in the production of televisions and home appliances, but recently things have not been going so well. The company lost a significant share of the display market to competitors from South Korea and China, and sharply reduced sales of mobile phones. In March 2015, Sharp announced an annual loss of 222 billion yen (about $ 1.87 billion), and then admitted that it was not confident in its ability to save the business. The financial quarter ended in December 2015 brought the corporation a net loss of 25 billion yen, more than twice as much as last year. Quarterly revenue fell by 13%, meanwhile, Sharp's loans are due on March 31, and in the past four years, lenders have already bailed out the company twice with emergency loans.

Foxconn announced its intention to buy Sharp back in 2012. At that time, it bought 10% of Sharp shares, but a year later the deal was terminated, as the Japanese company's poor financial performance caused its stock prices to plummet.

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In 2013, Samsung Electronics paid $111 million for 3% of Sharp shares, which many saw as an attempt by the Korean corporation to keep an important supplier of components afloat. However, since Samsung subsequently showed no desire to buy Sharp, rumors emerged about a possible merger of the Japanese company with Hon Hai. Among the contenders for the purchase of the corporation was the Japanese state investment fund Innovation Network Corporation of Japan (INCJ), which was going to combine the production of Sharp displays with Japan Display, which it partially owned. Initially, both Sharp and the Japanese government gave preference to INCJ, especially since in this case Japanese technologies would not come under foreign control, but then the choice was made in favor of a foreign investor who offered more and agreed not to fire Sharp employees and not to change its management.

The deal will allow Foxconn to supply its main client, Apple, with displays of its own production. The Japanese corporation will receive new sales channels. "Sharp has the technology to produce components that will allow it to compete with Samsung as one of Apple's suppliers," Gavin Parry, managing director of Hong Kong-based Parry International Trading, explained to Reuters. According to him, as a result, such cooperation could help Apple abandon its competitor Samsung, and Foxconn will be able to supply components to Apple at better prices.

Taiwan's Foxconn to acquire 65.9% of Sharp