Merge against Samsung
Japanese electronics giant Sharp Co. will be acquired by Taiwan’s Hon Hai Precision Industry. It is the first foreign takeover of a major Japanese electronics company. Hon Hai is planning to compete with Korean electronics companies through the acquisition of Sharp.
At a board meeting on Feb. 25, Sharp decided to accept Hon Hai's acquisition offer of 700 billion Japanese yen (US$6.25 billion or 7.7 trillion won), including investment, Japanese leading media Nikkei business daily reported.
Sharp was supposed to decide whether to accept a rescue package from Hon Hai at the board meeting on the 24th, but reached the decision on the 25th after a long discussion. The company will be incorporated into Hon Hai and accelerate the restoration of its display business, which has been depressed so far, in the future. With the takeover of Sharp, Hon Hai is aiming to increase its share in the global market.
In the meantime, according to Japanese news agency gJiji Press on February 25, Hon Hai said in an email statement, “We postponed making the acquisition contract for the time being.” In the statement, Hon Hai disclosed that the company received an important new document from Sharp on the previous day, saying, “The contents of the document need to be checked thoroughly.”
However, neither Hon Hai nor Sharp opened the contents of the document. Quoting an industrial source, the internet edition of the Wall Street Journal said that Sharp presented Foxconn with a 100-point list of contingent liabilities totaling 350 billion yen.
Jiji Press said that Hon Hai was closely going over the 100-point list and did not give up buying the company.
Hon Hai’s sales from Apple’s iPhone production take up most of its gross sales. However, it is urgent for the company to diversity income sources as the global demand for the iPhone is recently slowing down. Accordingly, Hon Hai plans to compete with Korean companies, including Samsung Electronics, by acquiring Sharp, which has various products and technologies, including display and white goods.
The latest takeover of Hon Hai, which runs China’s Foxconn, the production base of Apple, and Taiwan’s largest flat-panel maker Innolux, is expected to bring about an upheaval in the global TV and display market. In particular, the Japanese display industry, which once led the global market, is virtually disappearing and Chinese TV and display makers with the price and technological competitiveness are about to threaten Korean companies.