However, on Thursday, shortly after Sharp’s announcement of its approval of the deal, Foxconn appeared to throw doubts on the pact, saying it would postpone signing on the agreement until it had reviewed some “new material information” from Sharp, reports said.
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One of the sources, reading from details sent by Sharp to Foxconn, said the Japanese group had contingent liabilities that amount to “hundreds of billions of yen”.
The reports ended weeks of speculation over whether Sharp would choose an offer from a domestic investment fund or Taiwan-based Hon Hai Precision, a major Apple supplier.
It hopes to be able to clear up the matter as soon as possible, it said in a statement. In agreeing to the deal, Sharp executives have chose to put behind them ill-feelings over the breakdown of a 2012 agreement between the two companies to form capital ties. It has struggled with heavy debts and has been through two major bailouts in the last four years.
Sharp also held talks with Innovation Network Corporation of Japan over a possible deal, but Foxconn managed to beat out the rival bid.
According to the Wall Street Journal, which cited people familiar with the matter, Foxconn – which assembles most of the world’s iPhones – has offered to take over Sharp for 700 billion yen ($6.2 billion).
Media said the government and Sharp’s bank creditors were concerned about the company’s key technologies falling into the hands of a foreign firm. Foxconn’s founder had been courting the company for quite some time, and a deal could not be made until Japan opened its tech sector up to foreign investment. Foxconn will also buy the assets of a joint venture it already has with Sharp, Sakai Display Products, an LCD factory in Osaka.
Investors in Sharp were also unimpressed by the plan, which would involve the creation of more than 3 billion new shares at a significant discount to the stock’s current price on the Tokyo exchange.
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The century-old company, which supplies smartphone and tablet screens to Apple after starting out as a maker of belt buckles and pencils, was once among Japan’s leading firms and its brand was internationally recognized.
