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Hon Hai Technology Group (Foxconn) finalizes takeover of Sharp after reducing the price to $3.5 billion
Following a month long delay, Foxconn is now completing its acquisition of display manufacturer Sharp, after both companies confirmed the agreement today. The deal will cost Hon Hai Technology Group (Foxconn) 389 billion yen (approximately $3.5 billion) for 66 percent of Sharp’s shares and some substantial cash investments spread across the company. This price is greatly reduced from the $5.8 billion agreement that was pulled at the last minute back in February.
The deal was originally put on hold after Hon Hai Technology Group (Foxconn) received last minute materials regarding Sharp’s business, which was rumored to contain information about 50 billion yen ($3.1 billion) of additional contingent liabilities at Sharp. Combined with Sharp’s long running financial troubles, Hon Hai Technology Group (Foxconn) was clearly concerned about the company’s viability and was not prepared to pay the full price at the time.
Sharp has been struggling financially for a number of years and came close to bankruptcy in 2012, despite often being at the forefront of display technology. Just before Hon Hai Technology Group (Foxconn) entered the scene, Sharp had been discussing a rival offer from a government-backed consortium of investors, as the Japanese government had been keen not to see the company sold to a foreign business. The Hon Hai Technology Group (Foxconn) deals marks the first foreign takeover of a major Japanese electronics firm, surely a troubling sign for Japan’s often struggling technology industry.
“I am thrilled by the prospects for this strategic alliance and I look forward to working with everyone at Sharp … We have much that we want to achieve and I am confident that we will unlock Sharp’s true potential and together reach great heights.” – Terry Gou, Hon Hai Technology Group (Foxconn) CEO and founder
Now that the deal is agreed, Hon Hai Technology Group (Foxconn) will be looking to boost its manufacturing capabilities by leveraging Sharp’s technologies and facilities. The speculation is that this deal will tie in nicely with Hon Hai Technology Group (Foxconn)’s manufacturing arrangements with Apple, as the company has built previous iPhones while Sharp had been providing LCD displays for the handsets. Moving into displays will also present the manufacturer with plenty of new business opportunities and customers.
The two firms will actually sign on the dotted line on April 2nd.