Foxconn delays Sharp takeover

Taiwanese electronics manufacturer Foxconn announced it would delay a deal to purchase Japan´s Sharp after receiving new documentation.

On Wednesday morning, Sharp had "couriered over a new key document to the management of Hon Hai" whose content needed to be clarified before proceeding, Foxconn, better known by its official name of Hon Hai Precision Industries.

Earlier on Thursday, Sharp had accepted the 4.5bn pound takeover offer from its rival and even announced it would issue 3.28m new shares to be subscribed by Hon Hai Precision Industries at a price of 118 yen each.

News of the deal sent shares in Sharp spiralling lower by 14.37% overnight to 149.0 yen in Tokyo, with trading having been halted at one point during the session.

The decision taken by the board of the Japanese electronics-maker surprised some market observers, given Japan´s widely-known aversion to relinquishing its best-known brands to foreign buyers and the frequent conflict of interest disputes involving Taiwanese companies and their contract-manufacturing operations.

Hon Hai Precision Industries had also been expected to lose out to Innovation Network of Japan, reports indicated.

Details on the deal’s financial breakdown weren’t immediately provided although Foxconn reportedly paid a hefty premium.

To clinch the deal the Taiwanese firm had promised Japanese authorities it would keep the company intact and not carry out major layoffs.

Foxconn had already made a failed approach to buy-out Sharp in 2012.

Nevertheless, loss-making Sharp had already been through two major bailouts in the last four years, fanning doubts about Foxconn´s ability to turn around the enterprise.

Some analysts believed the Taiwanese firm´s bid was motivated by its desire to move into the market for screens for the next generation iPhone via the acquistion of Sharp´s technology and 10.4% share of the market for mobile displays.

For the quarter ending in September, Sharp reported a net loss of $44m on sales of $5.9bn, versus Foxconn´s net profits of $1.16bn on revenues of $32.1bn.