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September 25, 2017

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Hon Hai's Gou may visit Sharp for last-ditch talks

TAIPEI -- Terry Gou (郭台銘), founder and chairman of Hon Hai Precision Industry Co. (鴻海), is expected to visit the headquarters of Japan-based Sharp Corp. for last-ditch talks to acquire the financially troubled Japanese electronics firm, Japan's Sankei Shimbun reported Thursday.

The report said that Gou will visit Sharp's headquarters in Kansai by the end of this week to speak with executives of the Japanese firm about a possible acquisition.

Before his visit to Sharp's headquarters, Gou met with two officials from Japan's Ministry of Economy, Trade and Industry in Tokyo on Tuesday, expressing Hon Hai's willingness to provide a 6,250 billion Japanese yen (US$52.52 billion) bailout package for Sharp, the report said.

According to the report, the bailout package proposed by Hon Hai, known as Foxconn outside of Taiwan, includes a 500 billion yen offer to acquire Sharp, and a plan to spend 125 billion yen to boost its stake in Sharp's flat screen plant Sakai Display Products (SDP) in Osaka's Sakai City, which is jointly owned by Hon Hai and Sharp.

In July 2012, Gou, in a personal capacity, acquired a 37.6 percent stake in the advanced display panel plant from Sharp, which also currently holds a 37.6 percent share. Japanese media reports have said that Gou is planning to raise his stake in SDP to more than 50 percent.

The Sankei report came after the Asahi Shimbun reported a day earlier that Sharp is likely to accept a 300 billion yen bailout plan proposed by the Innovation Network Corp. of Japan (INCJ), which is sponsored by the Japanese government.

The Sankei report showed that Gou remained very interested in Sharp and that he planned a meeting with high-ranking executives of the Japanese firm for direct talks.

Meanwhile, Japan's Kyodo News said that the INCJ and the Japanese government have been exploring the possibility of cooperating with Hon Hai after the INCJ acquires Sharp.

Hon Hai agreed in March 2012 to buy a 9.9 percent stake in Sharp for 66.9 billion yen, but the deal fell apart in 2013 after a weak earnings report from the Japanese firm sent its shares into a tailspin.

The negotiations also broke down after Sharp rejected a request made by Gou to have a say in the company's management. Despite the failed bid in 2012, Hon Hai has still been looking to acquire Sharp.

During his stay in Tokyo, Bloomberg reported, Gou was taking his acquisition plan directly to major lenders of Sharp — Mizuho Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. — in an attempt to fend off a bid by the INCJ. According to the report, Hon Hai's plan includes a purchase of 200 billion yen worth of Sharp's preferred shares owned by the banks.

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