Foxconn-Sharp deal delayed as Japan Display flounders

Taiwan electronics giant Hon Hai Precision Industry announced on Wednesday it was seeking guidance from Japan's Sharp Corporation on the latter's latest quarterly performance, as it tried to move towards finalising a planned acquisition.

The deal - estimated to be worth more than £4bn - was teetering recently, after reports in February that Sharp had contingent liabilities of around JPY 300bn (£1.87bn), which had not been disclosed to Hon Hai prior to the bid.

Shares in Sharp tumbled 11.84% in Tokyo during trading on Wednesday.

Unnamed sources close to the deal told Reuters the acquisition may now not be signed this week, though they added Hon Hai was unlikely to walk away at this stage, given its hunger for Sharp's screen technology.

Hon Hai - better known as Foxconn, which assembles iPhones - declined to comment. A Sharp spokesperson was quoted as saying both companies were working hard to reach a satisfactory agreement as soon as possible.

The combination was said to allow Hon Hai to strenghten its pricing power with client Apple, and give Sharp better access to Taiwanese distribution channels.

Sharp selected Hon Hai as its preferred suitor in February over the state-sponsored Innovation Network Corporation of Japan, which wanted to merge Sharp's display sector with rival Japan Display.

Japan Display was now left floundering, and announced on Wednesday it would close two LCD production lines in Japan in a bid to boost profitability and raise funds for newtechnologies.

Sharp was due to announce its annual results in late April.