In 2012, Foxconn, Taiwan’s leading electronics manufacturing company, first offered to invest in Sharp when it was on the brink of bankruptcy. Foxconn’s acquisition bid was considered a lifeline as Sharp has been bailed out twice over the past four years.
Foxconn eventually defeated government-backed fund Innovation Network Corporation of Japan in the bid and won the deal worth US$4.3 billion. That’s despite the fact that Japan has always been wary about having its prominent brands taken over by foreign companies.
The acquisition involves Sharp issuing new shares to Foxconn or about 66% of the company’s ownership and management control. On its official website, Sharp has indicated that Foxconn has promised to keep the brand’s name, maintain Sharp’s independence, and keep its workers and not to make Sharp’s technology public.
It would have been the first foreign takeover of a major Japanese electronics firm in a historically insular technology sector had everything gone smoothly. But in an unexpected move last Thursday, Foxconn said it would delay the signing of its deal with Sharp before it reaches an understanding of “one key document.” The delay was due to previously undisclosed losses as it was reported that Sharp’s liabilities amounted to US$3.1 billion.
In a joint statement this week, Foxconn and Sharp said they have yet to schedule a date of signing the deal though they hope to reach a satisfactory agreement soon.
National Chiao Tung University Finance professor Yeh Yin-hua said the takeover bid will allow Foxconn to own Sharp’s innovative technology of display panels and electronic home appliances so it can compete with Samsung, Korea’s biggest electronics maker. Still, Yeh said the bid involves great risks related to finances, operations and overpayment.
Meanwhile, Taiwan’s Financial Supervisory Commission says it is closely watching the deal due to the uncertainties surrounding Foxconn’s acquisition plan.