Foxconn buys Sharp for $3.5 billion
Last month Sharp announced that Foxconn would be acquiring the company for $6.2 billion. However Foxconn was concerned with the financial future of Sharp and decided to put the deal on hold in order to renegotiate some of the terms.
Now the deal is finally complete and Foxconn has acquired a 66 percent majority stake in Sharp for around $3.5 billion. This is the largest overseas investment in a Japanese company to date and its proposal caused quite a stir in Japan.
Innovation Network Corp, which is backed by the Japanese government, wanted to buy out the company instead in order to split Sharp and its display business. Its goal was to add the display side of the company to a joint venture between Sony, Toshiba and Hitachi, which produces LCDs called Japan Display. However Sharp rejected the deal in favor of the more lucrative Foxconn offering.
Foxconn is also gaining a lot from the deal by acquiring Sharp’s display technology, which it will use to produce LCD displays mainly for Apple. This will make it cheaper for the company to build devices from Apple as it will no longer have to rely on Samsung and LG to produce the displays it uses in the iPhone.
Foxconn has also began a push to manufacture electronics and sell them under its own brand. Currently the company produces TVs which it sells in Taiwan. Sharp’s television displays could help Foxconn expand its efforts in this market as well as in mobile.
Since 2010, Terry Gou the founder and CEO of Foxconn has been interested in either investing in or acquiring Sharp. He even made a personal investment of $617 million in a subsidiary of Sharp in 2012 to show his deep interest in working with the company.
Gou will now finally have the chance to work alongside Sharp and take advantage of the companies’ potential.
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