Hon Hai announces Sharp deal

by Matthew Strong

TAIPEI (Taiwan News) – Hon Hai Precision Industry Co., Ltd. announced Wednesday that it had reached a deal to buy 66 percent of Japan’s troubled Sharp Corporation for 388.8 billion yen (NT$111.8 billion, US$3.4 billion), with the accord to be signed on April 2.

The move brings to a temporary ending years of rumors about what the Taiwanese media have termed the “Hon Hai-Sharp love affair.” Wednesday’s announcement had been expected since the Taiwanese company applied the day before to have trading in the shares of two of its group companies suspended for a day.

The price Hon Hai announced was about 100 billion yen lower than estimated earlier. Both sides were planning to hold a joint news conference to sign the deal on April 2 in Osaka, Sharp’s hometown.

The Taiwanese company will spend 288.8 billion yen on Sharp’s common shares and an eventual 99.99 billion yen on preferred shares issued by Sharp to its major credit banks.

The long list of reports about a takeover intensified in late February, when Sharp itself announced it preferred Hon Hai’s offer to one from Japanese government-backed Innovation Network Corporation of Japan. However, enthusiasm was dampened again when the Taiwanese giant said it had uncovered information about “contingent liabilities” it had not known about earlier.

Top managers from Sharp and Japanese bankers visited Hon Hai Chairman Terry Gou in New Taipei City earlier this month to iron out differences about the bid.

Trading in the Hon Hai group’s shares is expected to resume on Thursday.

The deal has been described as the largest overseas takeover by a Taiwanese company and the largest overseas investment in Hon Hai’s 42-year history. The group, which also uses the name Foxconn, is best known as a manufacturer of Apple Inc. products.

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