Japan-based Sharp Corp. and Taiwan-based Foxconn are allegedly on course to ink a takeover deal in the coming week.
On Friday, Japanese publications reported that the two display manufacturers had finally reached amiable acquisition terms despite recurrent delays.
After a prolonged negotiation process, both Foxconn and Sharp agreed to a smaller bailout than initially planned for the latter, according to Reuters' sources. Both the companies are set to hold board meetings on Wednesday, March 30, to approve the acquisition. The two anonymous sources of the publication - who have direct information on the talks - also let on that the deal will be signed a day later on March 31.
According to media reports, Foxconn, which was previously known as Hon Hai Precision Industry, will be offering 100 billion yen (which is equivalent to $884.4 million) for the newly issued shares of Sharp. This amount is a sharp slide from the original figure.
"iPhone assembler Hon Hai Precision Industry and troubled Japanese electronics giant Sharp have agreed on a bailout that is 100 billion yen ($884 million) smaller than originally planned, according to people familiar with the ongoing talks," reports Asian Review.
Earlier in January, we reported that rumors of Foxconn taking over Sharp Corp. had emerged. It was projected that the former would shell out close to $5.3 billion for the latter's assets. The estimated figure soon swelled to $6.25 billion, which led to Foxconn having a bidding war with Innovation Network Corporation of Japan, which has stakes in Japan Display.
The proposed deal between Sharp and Foxconn was delayed after the former reported previously undisclosed liabilities of nearly 300 billion yen.
Now that Foxconn is poised to acquire Sharp, the deal will become the biggest acquisition made by a foreign company in the insular technology sector in Japan. Foxconn is expected to help Sharp pay back the 510 billion yen loan completely, but at interest rates that are not higher than 0.6 percent.
The deal will give a fillip to Foxconn, which is the main supplier for Apple. Sharp will have funds at its disposal, courtesy of the transaction, to begin the mass production of organic light-emitting diode (OLED) screens by 2018. This is the estimated time window for Apple to adopt the next-gen screens for its future iPhones.
Sharp stayed mum on the proposed transaction, whereas officials from Foxconn were unavailable for comment when contacted by Asian Review.
It is expected that both the companies will hold a press conference on April 2 in Tokyo, Japan, to officially announce the deal.
