Taiwanese manufacturer and mobile operator Foxconn has said it is in talks with Japanese electronics maker Sharp to resolve the situation that arose when the latter disclosed new information that put the former’s takeover plans on hold.
Taiwanese manufacturer and mobile operator Foxconn (TPE:2317) has said it is in talks with Japanese electronics maker Sharp (TYO:6753) to resolve the situation that arose when the latter disclosed new information that put the former’s takeover plans on hold.
Foxconn said in a stock exchange filing today that teams from both companies, including its financial adviser JP Morgan and legal adviser Baker & McKenzie, are in discussions “with the aim of reaching a comprehensive understanding and resolution of the situation”, adding that it hopes to reach a satisfactory agreement as soon as possible.
Sharp announced yesterday that it had had agreed to be bought by Foxconn, which makes smartphones including the iPhone, in a deal worth nearly US$6bn. However, just hours later, Foxconn said in a separate statement that it would not sign a definitive agreement until it had time to consider “new material information” disclosed by Sharp.
According to a Wall Street Journal report citing people familiar, the new information was a list of potential liabilities totalling some Y350bn (US$3.1bn), which Foxconn would have to assume if it took over the company.
Sharp said in its statement yesterday that it would issue around Yn489bn (US$4.3bn) worth of new shares to give Foxconn an approximate two-thirds stake in the company. Together with other considerations, the deal value is close to US$6bn.
The Japanese manufacturer noted that it had recorded large deficits for the year ended March 2015 resulting from factors such as increased competition in the LCD TV business in the US, reduced demand for energy solutions and a lack of foresight in responding to market changes.
In 2012, Foxconn had agreed to buy 10% of Sharp for about US$800m but talks later collapsed.