Apple (NASDAQ:AAPL) supplier Foxconn is to acquire Japanese electronics maker Sharp in the largest foreign takeover of a Japanese tech firm.
Advertisement
The news of the merger comes nearly three weeks following reports which said that the two companies were considering serious discussions regarding the takeover.
Japanese officials had been anxious about letting Sharp fall under foreign ownership because of the technology used in its display panels.
Analysts at investment and research firm Bernstein say they don’t think the deal would be a good one for Foxconn shareholders because the company would be paying more than Sharp is worth.
“The signing of the contract is suspended until a consensus is reached”, Foxconn said in a statement. Foxconn also assembles products for Amazon.com and Xiaomi Corp., in addition to Apple, who would all be able to access Sharp’s components through Foxconn.
However, Sharp’s statement said that INCJ was interested in taking on the manufacturer’s panel display business and then injecting around ¥300 billion (US$2.7 billion) into the remaining business segments.
Foxconn clearly faces challenges with its new purchase, having as it will to find a way to stem Sharp’s losses and get its business back on track.
Sharp was once a market leader in manufacturing displays, but the company has been in the line of fire as its displays lost the market share in Asia, while its mobile sales also decreased in Japan.
Sharp’s volatile stock soared almost six percent on the reports, which come after weeks of speculation over whether it would choose an offer from a domestic investment fund or Taiwan-based Hon Hai Precision, a major Apple supplier. Now according to Venturebeat, it seems that Sharp has agreed for the takeover and this will make it one of the biggest takeover of a Japanese firm by an outsider. The losses were more than double for the same period a year earlier when it reported higher revenue of 763 bn ($6.8 bn).
Advertisement
The price Foxconn was willing to pay for the operations was not revealed, though the company said that it would be seeking assistance from Apple for funding any acquisition that could happen.
