Foxconn is a major Apple iPhone assembler, and is pursuing Sharp primarily because the latter is the largest screens supplier for phones and tablets.
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Sharp has been in the TV business for decades but its recent investments in LCD and Premium TVs failed to reap benefits and instead it held back the Japanese giant.
A spokesman for Foxconn, which is known formally as Hon Hai Precision Industry Co Ltd, declined to comment on the issue. The fund has said it wants to merge Sharp’s display business with Japan Display Inc (6740.T), in which it is the top shareholder.
Foxconn received new key information from Sharp on Wednesday, and responded that it needed to clarify some parts of the document.
Two sources with direct knowledge of the matter said the Japanese group had contingent liabilities that amounted to “hundreds of billions of yen”.
The Japanese company, which has businesses in consumer electronics, components like camera modules, solar cells and LCDs, was earlier negotiating a deal with Innovation Network Corporation of Japan, which is backed by the Japanese government.
Sharp’s board voted unanimously to accept the offer over a rescue by a state-backed investment fund, sources said, declining to be identified as they were not authorised to speak on the matter. Foxconn’s offer is also seen as beneficial for Sharp’s creditor banks, anxious to limit their losses after helping bail out Sharp twice already. Despite selling little in the way of first-party own-brand hardware, the company has the financial clout to pick up Sharp, one of Japan’s oldest technology firms, in a deal valued at $4.3 billion.
But the freakish series of events raises questions about why Sharp went ahead and announced the deal if it knew Foxconn was getting cold feet. The reported sales deal of Sharp to Foxconn is the biggest foreign purchase so far for a Japanese company in the history of the nation. In contrast, although the panel display segment is thought to be the main prize in the deal for Foxconn, Sharp said it viewed Foxconn’s plan to invest in Sharp across all segments of its business to be of greater interest on balance.
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The company has been a household name in Japan and is still associated in the public mind with devices such as propelling pencils, which are still referred to as “Sharp pens”.
