Foxconn agrees to revised Sharp deal

After months of stop-start discussion and stilted negotiations, Taiwan’s Foxconn Technology Group has agreed a deal to take over struggling Japanese technology company Sharp, albeit at a lesser price than originally proposed. The final deal, according to Foxconn, is worth $3.5bn, and gives the world’s top electronics contract manufacturer a two-thirds stake in the Japanese firm, to be signed on April 2.

The news is significant in that it marks the first foreign takeover of a major Japanese electronics company, and could signal a wind change in the way in which business is conducted in the country. In a joint press release, the two called the deal a “historic strategic alliance”, and later stressed a commitment to “restoring profitability and strengthening operations to once again make Sharp a leader in the global electronics arena.”

The Japanese company has fallen on hard times recently, which goes some way towards explaining the $2.5bn reduction on Foxconn’s original offer. In November of 2012 Sharp became the world’s worst performing major stock and suffered predicted losses of $5.6bn on the back of falling demand for TVs the world over. More recently, it has been reported that Sharp’s financial liabilities could number in and around the $2.7bn mark, a figure that is reflected in Foxconn’s revised offer.

Terry Gou, Founder and CEO of Foxconn, said, “I am thrilled by the prospects for this strategic alliance and I look forward to working with everyone at Sharp. We have much that we want to achieve and I am confident that we will unlock Sharp’s true potential and together reach great heights.”

Now that the deal is done, the Taiwanese electronics assembler will be looking to expand on its mobile display business and improve on its smartphone screen manufacturing capabilities. Smartphone screens are still the most expensive component in the mobile manufacturing process, and its two-thirds share in Sharp could help Foxconn climb up the value chain.