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Foxconn On Verge Of Acquiring Sharp

Originally published on Sustainnovate.

Foxconn & Sharp May Revise Terms of Approved Acquisition

Despite earlier news of the acquisition of the Japanese electronics company Sharp by the the Taiwan-based Foxconn, it appears that the deal is now being renegotiated — owing to the revelation of further potential liabilities.

The deal — which would mark the first time that a major Japanese electronics company has been taken over by a foreign company — is notable to those in the solar photovoltaic (PV) field, as it may signal the beginning of the end for Sharp’s solar division.

The $6.2 billion bailout deal was a “necessity” owing to heavy losses in 2015 for Sharp, amongst other things. The two companies are currently to salvage the deal, reportedly — with a revision to the terms of the arrangement being sought.

Bloomberg providers details:

Bankers and lawyers are going through a list of Sharp liabilities that could exceed 300 billion yen ($2.6 billion), a last-minute stumbling block in Foxconn’s effort to take control of the struggling Japanese company, according to the people, who asked not to be identified as the talks aren’t public. It’s too early to tell whether Foxconn will lower the value of its offer for Sharp or change its bid in some other way, said the people. Any material change to the offer would require Sharp’s board to vote again on the Foxconn proposal, the people said.

Foxconn Chairman Terry Gou has fought for months to take over Sharp, battling a competing offer from a once-favored domestic bidder, Innovation Network Corporation of Japan. Foxconn offered a package worth in excess of 600 billion yen — more than twice INCJ’s bid — with most of the money going into Sharp through the purchase of additional shares. Only hours after Sharp’s board approved its offer on Thursday, Foxconn said it had received new information from Sharp and wouldn’t go through with the deal until it had resolved the issues.

Foxconn has made it clear it was surprised by the latest information from Sharp. On Friday, Foxconn said it had received new documents on February 24 — the day before the Sharp board decision — that had never been submitted in previous talks. Its financial adviser JPMorgan Chase & Company and legal adviser Baker & McKenzie are discussing the matter with Sharp to clarify situation and seek solutions, it said.

“It’s a complicated situation. It’s difficult to judge whether Foxconn is shaking up Sharp or they really need some time to check the facts,” stated Hideki Yasuda, an analyst at Ace Research Institute in Tokyo.

Notably, the Japanese company Innovation Network Corporation of Japan (INCJ) had placed a bid as well, but it was far lower than Foxconn’s bid. It was rumored that, had INCJ’s bid been chosen, Sharp’s solar energy division would have been combined with Solar Frontier.

Image: Screenshot of Sharp Solar website

 
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