Foxconn to Buy Majority Stake in Sharp for $3.5 Billion
HONG KONG — Foxconn Technology Group has finally sealed a deal to take over a majority of the beleaguered Japanese electronics maker Sharp, the companies said Wednesday.
The deal comes after months of dramatic back-and-forth talks about he terms of the deal for the well-known but heavily indebted Japanese television brand. It also follows years of interest from Foxconn’s chairman, Terry Gou, who has long had interest in the ailing Japanese brand. He made a bid for a stake in Sharp in 2013 that fell apart.
Foxconn said it would take over 66 percent of Sharp, with a total investment of 389 billion yen, or about $3.5 billion. Foxconn is buying ¥289 billion worth of common Sharp shares and an additional ¥99.99 billion worth of nonvoting preferred shares, according to a joint statement.
The total investment is well below the $5.5 billion that Foxconn was expected to pay last month before it balked after discovering that a new owner could be liable for close to $3 billion in potential liabilities.
Unlike Mr. Gou’s last bid for a piece of Sharp, this deal was not scuttled by the last-minute drama. Mr. Gou’s persistence has allowed him to lay claim to the largest acquisition of a Japanese consumer electronics company by an overseas buyer.
Mr. Gou’s Foxconn outmaneuvered an investment fund backed by the Japanese government to take over Sharp.
For Mr. Gou, who founded Foxconn when Japanese electronics companies were world beaters, Sharp both adds scale to his electronics manufacturing empire and gives him control of a well-known brand. Foxconn has been trying to become more profitable by growing beyond low-cost manufacturing, mostly at its city-size factories in China.
Still, analysts have been mixed on the deal. Sharp’s business has been riddled with inefficiencies and debt, and though it makes many of the displays that go into the Apple’s iPhones, some argue that Apple may be moving to newer technology offered by Sharp’s rivals.
