Foxconn Raises Offer for Sharp to $5.45 Billion
29 January 2016 - 11:00PM
Dow Jones News
Foxconn, the Taiwanese iPhone assembler, has raised its offer to
take over Japanese electronics maker Sharp Corp. to ¥ 659 billion
($5.45 billion) in a deal that would dilute existing stockholders,
people familiar with the matter said Friday.
Foxconn doesn't plan to buy out Sharp shareholders, one of the
people said, clarifying the structure of a bid whose details were
murky until now. Rather, it would inject ¥ 389 billion into Sharp
in exchange for new shares, after which it would hold a roughly
two-thirds stake.
In addition, Foxconn has offered to buy Y225 billion worth of
preferred shares held mainly by Sharp's two main banks, Mitsubishi
UFJ Financial Group Inc. and Mizuho Financial Group Inc., people
familiar with the matter have said. The preferred shares were
issued to the banks last year after they agreed to bail out Sharp
for the second time in three years.
The latest offer from Foxconn is a slight upgrade from a
previous package worth ¥ 625 billion. Foxconn has also offered to
assume Sharp's bank debts, which total about ¥ 700 billion.
Foxconn's bid, which also includes ¥ 45 billion to buy the land
beneath Sharp's advanced panel-making factory in Sakai, Japan, is
higher than a competing offer from Innovation Network Corp. of
Japan, a government-backed Japanese investment fund.
INCJ is offering to invest no more than ¥ 300 billion in Sharp
in return for control and new shares, one of the people said. But
that deal would give Sharp's banks little or nothing for their
preferred shares, according to people familiar with the matter.
Sharp, INCJ and Foxconn, formally known as Hon Hai Precision
Industry Co. declined to comment.
Japanese officials have expressed concern about letting Sharp
come under foreign control, citing the company's technology in
display panels. Foxconn has attempted to soothe concerns by
pledging not to replace top management or push for other job cuts,
the people said.
Foxconn Chairman Terry Gou traveled to Japan this week to meet
with government officials and is expected to give a presentation to
Sharp's board of directors in Osaka on Saturday, two of the people
said.
For Mr. Gou, a potential deal for Sharp is an opportunity for
Foxconn to reap cost benefits in supplying its biggest customer,
Apple Inc., which provides almost half of the Taiwanese assembler's
revenue, they said. Foxconn believes it could also help Sharp fill
excess capacity with its wide range of customers, one of the people
said.
Write to Wayne Ma at wayne.ma@wsj.com and Takashi Mochizuki at
takashi.mochizuki@wsj.com
(END) Dow Jones Newswires
January 29, 2016 06:45 ET (11:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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