Foxconn Technology Group, the world’s largest contract electronics manufacturer, has offered about ¥600 billion ($5.1 billion) to buy ailing Japanese electronics maker Sharp Corp., according to an individual familiar with the matter.
Sharp Corp. has been facing stiff competition from its Asian rivals, resulting into persistent losses equivalent to $1.50 billion in the current year. It has been repeatedly bailed out with rescue packages by banks, the most recent being $1.19 billion by the major banks for its growth strategy. Additionally, the Ministry of Economy, Trade and Industry is reported to have concerns that Sharp’s technological innovations could be forwarded abroad.
In October last year, it was in talks with a handful of companies about its embattled LCD business, as it comes under severe pressure from its major lenders to find a partner/buyer for the loss-making division. Taiwanese Hon Hai Precision Industry Co. has previously shown interest in buying all or screen division while the government-backed fund is also in view of an investment in Sharp or merging the company’s LCD unit with competitor Japan Display Inc.
A decision to accept or turn down the bid for direct investment is expected before the end of this month.
Yoshifumi Seki, a spokesman for Sharp:
“We’re talking with several companies about the structural improvement of liquid-crystal-display business. We don’t comment on the details of individual talks."
Sharp is taking into consideration a review of the offer from Foxconn as well as a competing bid from Japanese government-backed Innovation Network Corp. of Japan (INCJ). After reports of the possible sale of its LCD panel business and possible investment from INCJ, Sharp is in negotiation phase with other companies regarding “fundamental structural reforms” of its LCD panel business. If it inks a deal with INCJ, the government-backed body will have a significant involvement in its reform.
Foxconn does not plan to replace Sharp’s top management, a move that could reassure Japanese officials who are perturbed about protecting jobs and keeping the company local. The Taiwan-based electronics manufacturer has previously shown interest in investing in a 10 percent stake in Sharp.
Sharp employs over 46,000 workers, approx. half of which are based in Japan, while the other half is scattered in foreign manufacturing facilities at Poland and Indonesia.