Foxconn to Buy Sharp for $3.5 Billion After Slashing Initial Offer
The world’s biggest manufacturing brand will take Sharp’s display nous to make iPhone displays better.
Taiwanese company Foxconn that assembles Apple’s iPhones has agreed to buy a majority stake in financially struggling
Sharp Corp for $3.5 billion. This is the first foreign takeover of a major Japanese electronics manufacturer.
Foxconn, formally known as Hon Hai Precision Industry Co, will pay about $3.5 billion for a two-thirds stake, cutting its initial offer by nearly $900 million following the emergence of previously undisclosed liabilities at Sharp.
The deal marks the largest acquisition by a foreign company in Japan’s insular tech industry and the end of independence for a 100-year-old company that started out making belt buckles and mechanical pencils.
It also gives the world’s top electronics contract manufacturer control of Sharp’s advanced screen technology which it does not have. This will help Foxconn strengthen its pricing with its biggest client, Apple Inc.
Under the revised terms, Foxconn will pay 88 yen per Sharp share, a 35 percent discount to Wednesday’s close, the companies said in a statement. This is a likely reflection in part of the Chinese obsession with the lucky number eight.
I am thrilled by the prospects for this strategic alliance and I look forward to working with everyone at Sharp. We have much that we want to achieve and I am confident that we will unlock Sharp’s true potential and together reach great heights.Terry Gou, Founder, Foxconn
The price of 389 billion yen was a reduction of 100 billion yen, or about 20 percent, from the 489 billion yen ($4.4 billion) that Sharp said Foxconn had agreed to pay. The Taiwanese company said at that time it wasn’t ready to sign a deal. The companies gave no reason for the change but news reports suggested Foxconn was concerned about taking on additional liabilities it learned about late in negotiations.
Foxconn, founded by Gou in 1974, is the biggest competitor in the global manufacturing outsourcing industry. It assembles smartphones and other devices for Apple, Sony, Blackberry and other brands.
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