Hon Hai strengthening cooperation with Sharp: executives
The China Post news staff
November 24, 2012, 12:26 am TWN
Executives of Hon Hai Precision Industry Co. based in Taipei yesterday declined to comment on the latest media report that Japan's Sharp Corp. is open to making concessions in the two companies' capital investment talks on the former's possible acquisition of a higher stake in the Japanese firm.
But they stressed that strategic cooperation with the Japanese consumer electronics supplier will continue strengthening, although the ongoing talks on capital investments in the Japanese firm have yet to yield concrete results.
Hon Hai said negotiations on further bilateral collaboration are under way and an appropriate time will be found in the future to disclose the final details to the public.
A report by The Wall Street Journal cited a senior executive from Sharp as saying the terms of an original agreement on the capital investments by Hon Hai have now become "impossible" as the Japanese firm suffers a lack of earnings stability.
The Japanese executive revealed Sharp is willing to alter the terms in the agreement with Hon Hai through renegotiation, adding the changes include a term to allow Hon Hai to take a more-than 10-percent stake in Sharp, in contrast to the original agreement in which Sharp wanted to cap the stake purchase at 10 percent and prevent Hon Hai from taking part in corporate administration and management.
According to Japanese rules, a shareholder that holds a stake greater than 10 percent in a company owns additional rights, such as the right to file a petition to the court to dissolve the company.
In March, Hon Hai and three of its affiliates — Foxconn Technology Co. Ltd., Foxconn (Far East) Ltd. and Q-Run Holdings Ltd. — signed the original agreement with Sharp to buy a 9.98-percent stake in the Japanese firm at 550 yen (US$6.67) per share.
However, with Sharp's share price continuing to plunge amid concerns over its financial bottom line, both sides started renegotiation on the terms of the deal in August.
Hon Hai has said that it hopes the deal will be completed by the end of March 2013.