Tópico: [EN] Foxconn buys Sharp
25-02-2016, 05:18 #1
[EN] Foxconn buys Sharp
Sharp Corp. agreed to a 700 billion yen ($6.2 billion) rescue deal from Taiwan's Foxconn
February 25, 2016 — 3:14 AM BRT
Taiwan’s Foxconn Technology Group will take control of struggling Japanese electronics maker Sharp Corp., beating out a government-backed rival in a rare victory for a foreign investor. The shares slumped 14 percent on plans to sell stock at a discount.
Foxconn, the parent of Hon Hai Precision Industry Co., will control 65.9 percent of Sharp after buying new shares at 118 yen apiece, the Osaka-based company said in a filing Thursday. That’s 32 percent less than Wednesday’s closing price. Sharp accepted the offer over one from state-backed Innovation Network Corp. of Japan.
Saddled with debt and struggling with chronic losses, the board of the century-old consumer electronics maker had to choose between INCJ’s plan to restructure by spinning off businesses, or staying whole under a foreign parent. Foxconn, the main assembler of Apple Inc.’s iPhone, is set to take over one of the largest suppliers of screens for phones and tablets. Chairman Terry Gou is seeking to broaden Foxconn’s remit, transforming it into a company that also makes key electronics components and devices.
“Sharp shareholders face a large dilution, but at least the stock isn’t worth
zero,” said Atul Goyal, an analyst at Jefferies Group LLC. “It isn’t a victory for Sharp shareholders. And I’m not at all sure if this is a victory for Foxconn and its shareholders may see that money simply evaporate.”
Sharp finished Thursday at a nine-month low of 149 yen. It will raise 484.3 billion yen ($4.3 billion) from the sale of shares to the Taiwanese company, according to a filing. Foxconn will also put down a 100 billion yen deposit that Sharp can keep if the sale, which is contingent on shareholder approval, doesn’t go through.
Foxconn had proposed a total rescue plan worth about 660 billion yen, a person familiar said previously. Hon Hai’s shares closed 2.6 percent higher on Thursday, before Sharp outlined details of its deal.
Sharp decided to go with the Taiwanese company’s offer after looking from various angles, Trade minister Motoo Hayashi told reporters in Tokyo. INCJ issued a statement wishing Sharp success. Representatives of Foxconn declined to comment.
As part of the deal, Foxconn will buy 100 billion yen of preferred shares owned by Mizuho Financial Group and Mitsubishi UFJ Financial Group, or half of each bank’s holdings. Mizuho ended 2.7 percent higher while MUFJ closed up 1.8 percent.
The battle has been seen as a test of Japan’s willingness to open its economy, following Prime Minister Shinzo Abe’s appeal for market reforms and overseas investments to boost growth. Struggling companies have long been able to rely on the country’s government and banks for support.
Gou flew to Japan to make a personal appeal to Sharp’s board and has said more than once he was confident of sealing a deal. INCJ had planned to inject 300 billion yen of cash into the company and argued its package was worth about 1 trillion yen once moves such as Sharp selling its stake in Sakai Display Products Corp. and financing from lenders was taken into account, documents presented to Sharp show.
The agreement follows years of on-off talks with Foxconn, which had offered 550 yen a share for a stake in Sharp in 2012, around which time the yen’s climb to a postwar high undermined profit and lower-cost challengers in South Korea and China trounced its pioneering liquid-crystal display television business. The stock closed Wednesday at 174 yen.
This time, Gou took his case for an acquisition of Sharp directly to major lenders and the Japanese government in an attempt to head off INCJ, according to a person familiar with the talks.
Sharp was Japan’s largest maker of liquid-crystal displays as of fiscal 2013, when it posed a record 545 billion yen net loss. That followed a year in which it reversed a profit forecast to a 290 billion-yen net loss, then two months later reported a 380 billion yen deficit. Its market value had tumbled to 296 billion yen as of Wednesday, down from almost 3 trillion yen in 2000.
Sharp will remain an independent company and keep the brand under new ownership, it said in a statement. The Japanese company, which pledged to maintain employment levels, will work with Foxconn on next-generation high-end flexible displays for smartphones and other devices.
Gou pointed to his 2012 personal investment in Sharp’s Sakai Display unit and subsequent turnaround at the LCD factory as an example of what Foxconn can do for the wider Sharp company, a person familiar with the matter said in January. That deal gave the Taipei-based company management control over the plant.
25-02-2016, 05:24 #2
Japan's Sharp 'accepts multi-billion-dollar bailout from Foxconn parent'25 February 2016
Embattled Sharp has accepted a multi-billion-dollar bailout from the parent company of Taiwan's Foxconn, media reported on Thursday, in what would be the first foreign takeover of a major Japanese electronics firm.
The deal, which could be worth as much as $6.2 billion, was agreed at a Sharp board meeting on Thursday, Japanese media including the leading Nikkei business daily reported.
Sharp's volatile stock soared nearly six percent on the reports, which come after weeks of speculation over whether it would choose an offer from a domestic investment fund or Taiwan-based Foxconn parent Hon Hai Precision, a major Apple supplier.
Sharp declined to comment on the reports, while Hon Hai could not be immediately reached.
Media have suggested the Taiwanese firm's offer would keep Sharp intact, while it would be broken up under a rival bid from the public-private Innovation Network Corporation of Japan (INCJ).
Despite its bleeding balance sheet, Sharp remains a leader in liquid crystal display technology, a key asset for Hon Hai.
The pair have worked together for years on large-sized screen technology, including for televisions, and industry watchers applauded the rare foreign takeover of a Japanese giant.
"Hon Hai and Sharp complement each other," said Yukihiko Nakata, a technology professor at Ritsumeikan Asia Pacific University and a former Sharp engineer.
"Sharp is strong in research and development while Hon Hai knows how to market products to customers such as Apple and it also has expertise in production... Together they can go global."
Mr Nakata threw cold water on the rival Japanese bid, saying it would not have been a good fit.
"The only advantage was economies of scale but that alone is not enough to compete in the global market," Mr Nakata said.
This month, Sharp's chief Kozo Takahashi refused to be drawn on which offer he favoured, but said his company was putting "more manpower" into evaluating the Taiwanese offer.
Media said the government was concerned about the company's key technologies falling into the hands of a foreign firm.
However, some critics warned against a government-backed bailout, pointing to Sharp as a prime example of a so-called zombie company that should be allowed to die.
Japan Inc. is littered with money-losing firms kept alive through bailouts and other assistance, partly to avoid massive job losses.
Century-old Sharp, which supplies smartphone and tablet screens to Apple but started life making belt buckles and pencils, was once among Japan's leading firms and its brand was internationally recognised.
The company's name once graced the jerseys of Manchester United players, but it has long since withdrawn from sponsoring the English Premier League football side.
Sharp has teetered on the edge of bankruptcy for years, piling up eye-watering losses and struggling through a restructuring plan that has yet to pull it out of the red.
This month, the firm posted a whopping nine-month net loss of more than $900 million, hit by restructuring costs and a slump in demand for its smartphone screens.
Along with rivals Sony and Panasonic, Japan's electronics giants were hammered by steep losses in their television units owing to stiff competition from lower-cost rivals, particularly in South Korea and Taiwan.
They were also outmanoeuvred in the mobile phone business, but Sony and Panasonic have seen improving results lately.
25-02-2016, 05:31 #3
Why did Foxconn buy Sharp? It’s all about the iPhoneJosh Horwitz
1 hour ago
Japanese electronics maker Sharp has accepted a bid from Taiwan’s Foxconn Technology Group to acquire it for ¥700 billion ($6.24 billion), Bloomberg reports.
The deal has been years in the making, with the earliest failed takeover dating back to 2012. Its completion has brought about some controversy in Japan, where foreign acquisitions of domestic tech firms remain unpopular. But it’s completion marks a key win for both Apple and Foxconn.
Foxconn assembles the iPhone—Apple’s best-selling product and the world’s most profitable smartphone—and also manufactures some of its components. These are goods and services it sells to Apple as part of its “bill of materials.”
The crown jewel in that bill is the screen—by far the most expensive part of an iPhone.
Foxconn doesn’t make displays. But Sharp does. So do LG, Samsung, and other electronics companies, some of whom make Android devices that compete with the iPhone.
By acquiring Sharp, Foxconn can earn an even larger portion of the overall bill of materials for the iPhone. Apple also benefits from the deal because it can buy iPhone screens from a partner, rather than a competitor like LG, from whom it currently buys screens. It might also be able to buy the displays for less than what LG or Samsung would charge for them, because of bulk purchasing benefits from Foxconn.
This could ultimately make the iPhone much cheaper to make—though not necessarily cheaper to buy. Apple won’t necessarily pass along the savings to its relatively price-insensitive customers.
25-02-2016, 05:36 #4
Foxconn of Taiwan Buys Sharp for $6 Billion
Sharp has lost about $10 billion over the last half-decade as foreign rivals have grabbed its market share and the price of LCDs has plunged.
By JONATHAN SOBLE
FEB. 25, 2016
Sharp, the ailing Japanese consumer electronics company, agreed on Thursday to a $6 billion takeover by Foxconn of Taiwan, the giant contract manufacturer that churns out products for Apple and other foreign brands.
The deal is the largest acquisition of a Japanese technology company by an overseas buyer.
Sharp’s board chose Foxconn over a government-backed investment fund that also sought control of the company, but offered less money. Sharp confirmed the agreement with Foxconn in a regulatory filing on Thursday and was expected to hold a news conference later.
For many in Japan, the contest for Sharp was a proxy for a larger economic and political struggle, one between traditional government-led industrial policy and the forces of an open global market.
The government fund, the Innovation Network Corporation of Japan, has been trying to rescue Japan’s shrinking television and smartphone display industry — or at least keep it in local hands — by buying up display businesses and combining them into a single national champion.
But the sale of Sharp, the largest Japanese maker of liquid crystal displays, to a foreign company represents a major setback for that effort. Sharp, by choosing Foxconn over Innovation Network— which is supported by influential Japanese government officials and armed with taxpayer money — effectively opted for the market.
Sharp indicated this month that it was leaning toward Foxconn, which was offering twice as much cash as the government fund.
Under the deal, Foxconn will pay just under 500 billion yen, or about $4.5 billion, for new shares to be issued by Sharp, giving it control of two-thirds of the company’s voting stock. It will also acquire ¥100 billion of nonvoting preferred shares that are held by banks that have extended loans to Sharp. And it will purchase real estate owned by Sharp.
Innovation Network, in contrast, offered to invest ¥300 billion in Sharp. It said the real value of its bid was larger, however, because it would have been able to use its influence with Japanese banks to get more funding. Emergency loans from the banks have kept Sharp afloat as its business has deteriorated in recent years.
Sharp has lost about $10 billion over the last half-decade as foreign rivals have grabbed its market share and the price of LCDs has plunged. It reported a net loss of ¥24 billion last quarter.
Until this month, Innovation Network was widely seen as the company’s most likely savior. In 2012, Innovation Network combined the LCD businesses purchased from Toshiba, Hitachi and Sony into a new company, Japan Display. The company has struggled, however, and its backers had hoped that adding Sharp’s production volume would make it more competitive.
Foxconn, also known as Hon Hai Precision Industry, owns vast contract manufacturing operations in China but has been seeking to expand into new areas. Its billionaire founder, Terry Gou, bought a minority share in an underused Sharp LCD factory in western Japan in 2012. Foxconn offered to buy a stake in Sharp itself at the time, but that part of the deal fell apart over a price disagreement.
25-02-2016, 05:45 #5
Deal marks rare case of Japan selling top brand to foreign buyer
Sharp Corp.’s board approved a plan Thursday for Apple Inc. assembler Foxconn Technology Group to take over the company for ¥700 billion ($6.24 billion), people familiar with the situation said, in a rare case of Japan Inc. relinquishing a venerated brand to a foreign buyer.
- For the last nine months of 2015, Sharp posted a net loss of 108 billion yen (about $960 million).
- The acquisition is a gamble for Foxconn CEO Terry Gou, who will face the challenge of turning around the Japanese company's operations.
- Analysts at the investment and research firm Bernstein say they don't think the deal will be a good one for Foxconn shareholders.
- Investors in Sharp were also unimpressed. The company's shares were trading nearly 18% lower after the deal was announced.
February 25, 2016
Foxconn will take over Sharp in a deal worth about 700 billion yen (about $6.24 billion), Sharp announced today, confirming months of reports that the huge Taiwanese corporation was looking to buy the Japanese firm. Foxconn's share purchase will give it control of 65.9 percent of Sharp, the Taiwanese company beating out competition from a Innovation Network Corp. of Japan, a group funded by the Japanese government, to complete one of the biggest ever acquisitions of a Japanese company by a foreign entity.
Foxconn president Terry Gou said his firm had been been chasing Sharp for at least four years. His company reportedly offering the Japanese company 600 billion yen (about $5.1 billion) earlier this year, and upping its bid to 659 billion yen (about $5.44 billion) soon afterwards, before agreeing on the final price. Sharp has suffered heavy losses in recent years, but Gou's company has promised to inject billions in a bid to establish it as one of the world's major suppliers of the next generation of smartphone screens, aiming to compete with Samsung to possibly provide Apple with OLED displays for future iPhones.
Some analysts criticized the planned deal ahead of time, citing Foxconn's lack of experience in Sharp's sector and possible conflicts of interest, while others in Japan argued Sharp should remain under Japanese ownership, but the WSJ says the Taiwanese company was reportedly willing to pay extra to win over Sharp's board members. The deal — if accepted by Japanese regulators — would also be good for Apple, which likely doesn't want to rely on Samsung alone for OLED screens.
25-02-2016, 07:36 #6
Sharp slumps 14% after Foxconn confirms it'll take control of struggling electronics
25-02-2016, 07:40 #7
What's behind the takeover?
Two bailouts in three years, chronic losses and debts and a century old legacy - the board of Japan's Sharp Corp certainly has its work cut out.
Asia business correspondent
10 minutes ago
Trying to save one of the giants of the Japanese tech sector has been challenging to say the least, but even harder if the defacto response in your industry to any foreign takeover deal is usually a no.
That's because Japan's technology sector is historically extremely insular, and has been reluctant to let outsiders in.
But when times are tough, business acumen trumps nationalistic tendencies.
Sharp, a major producer of display screens for smartphones, tablets and TVs, has struggled to turn a profit for some years now.
A takeover by Foxconn, which assembles smart phones and TV sets for the likes of Apple and Sony could help Sharp to sell its liquid crystal display panels elsewhere in the region, and inject fresh funds and ideas into the ailing electronics maker.
Although this deal is the biggest foreign takeover of a major Japanese tech firm it's not the first time we've seen a foreign company get involved with a Japanese one.
Remember Nissan back in 1999? It formed a strategic partnership with France's Renault, and the two firms are joined together through a cross-shareholding agreement. To be fair though, Renault owns 43.4% of Nissan, with full voting rights, whereas Nissan owns a 15% stake in Renault - and has no voting rights. So guess who controls that relationship?
That the Nissan-Renault deal was structured in such a way was likely to assuage concerns at the time of foreign interference in Japanese business. Almost two decades later it will be interesting to see what form the Foxconn-Sharp deal will take if it happens.
But Sharp has been burned by Foxconn before, so it may be more cautious this time round and push for more on the deal table.
In 2012 Sharp nearly entered bankruptcy struggling against the competition from cheaper South Korean and Chinese rivals. According to reports, Foxconn agreed to buy a 10% stake in Sharp for some $800m (£573.5m). But after Sharp's share price continued to fall the two companies failed to come to an agreement on the renegotiated share price both sides were willing to accept.
But turning Sharp around won't be easy. Even after two bailouts it has been unable to turn its fortunes around. Will Foxconn be able to succeed where others have failed?
Some analysts say that Foxconn's offer doesn't pass "the smell test." Atul Goyal, at Jefferies is a Sharp watcher, and points out "Given Foxconn's track record with earlier panel acquisitions..it doesn't bode well for shareholders of Sharp."
He adds that it isn't entirely clear "what Foxconn wants….It doesn't have experience in any of Sharp's businesses."
One of the reasons perhaps, why Sharp's shares were so volatile today.
What Sharp used to make:
1915 TO 1919: The Ever-Sharp mechanical pencil (lapiseira), which is where the company got its name from, was one of Sharp's founder's first inventions
1925 TO 1930: First generation Japanese radio sets
1953 TO 1954: Japan's first commercially produced TV set
1960 TO 1961: Mass production of colour televisions.
1964 TO 1966: The world's first all transistor-diode electronic calculator.
1976 TO 1978: Sharp develops a TV employing an EL panel that is a mere 3 cm thick.
1992: LCD ViewCam, ushering in a new era in video cameras.
1999: Sharp announces the world's first 20-inch LCD TVs
2007: Sharp develops a 108V-inch LCD TV that it shows at the 2007 International Consumer Electronics Show in Las Vegas, Nevada.
Última edição por 5ms; 25-02-2016 às 07:50.
26-02-2016, 07:02 #8
Foxconn delays Sharp takeover after finding "liabilities"Makiko Yamazaki and J.R. Wu
Feb 25 2016
Taiwan's Foxconn put its takeover of electronics maker Sharp Corp on hold on Thursday after discovering previously undisclosed liabilities, sources said, throwing into doubt what was set to be the biggest takeover by a foreign firm in Japan's technology sector.
Loss-making Sharp announced earlier in the day that it had agreed to be bought by Foxconn, a contract manufacturing firm that is a major Apple Inc supplier.
But, in a separate statement issued just hours later, Foxconn said it would not sign until it had clarified terms in "new material information" from Sharp. It did not elaborate.
Two sources with direct knowledge of the matter said the Japanese group had contingent liabilities that amounted to "hundreds of billions of yen".
That issue would have to be resolved before a deal could be finalised, said the sources, who spoke on condition of anonymity as the talks were confidential.
The sources did not elaborate on the nature of the liabilities or the exact amount. Reuters has not seen a copy of the new information.
A spokesman for Foxconn, known formally as Hon Hai Precision Industry Co Ltd, declined to comment on the issue. Sharp also declined to comment.
FIVE YEARS IN THE MAKING
The 11th hour delay jeopardizes a deal that would have marked the conclusion to five years of courting by Foxconn founder and billionaire Terry Gou and the opening up of Japan's insular tech sector to foreign investment.
The loss-making display maker said earlier in the day that it would issue around $4.4 billion worth of new shares to give Foxconn a two-thirds stake. Foxconn's investment is set to total more than 650 billion yen ($5.8 billion), a separate source familiar with the matter said.
If a deal does go through, it would boost Foxconn's position as Apple's main contract manufacturer and enable Sharp to start mass-producing organic light-emitting diode (OLED) screens by 2018, around the time Apple is expected to adopt the next-generation displays for its iPhones.
Foxconn sees ownership of Sharp as a way to better compete with Asian rivals such as Samsung Electronics Co.
"Sharp has the technology to build out the components to compete with Samsung as an Apple supplier, which means that with Sharp under its umbrella, Foxconn can help Apple wean itself off Samsung," said Gavin Parry, managing director of Parry International Trading, a brokerage in Hong Kong.
"This gives Foxconn better pricing power with Apple," he added.
Before Foxconn's late statement, Sharp's stock tumbled to end 14 percent lower as the share dilution looked larger than expected, with traders noting the proposed deal included the issuance of a class of shares that would be convertible next year.
Sharp's board voted unanimously to accept the Foxconn offer over a rescue by a state-backed investment fund, Chief Executive Kozo Takahashi told reporters.
Foxconn shares ended 2.6 percent higher.
THINNER, LIGHTER, MORE FLEXIBLE
Sharp said it aimed to become a global supplier of OLED screens, which are thinner, lighter and more flexible than current displays. South Korea's Samsung Display and LG Display are also investing heavily in the new technology.
The century-old Japanese firm was once a highly profitable manufacturer of premium TVs and a favored screen supplier to Apple.
But it has struggled in recent years as massive investments in advanced liquid crystal display plants failed to pay off amid price competition with Asian rivals, and two bank bailouts since 2012 did little to help turn its business around.
The late hitch revived memories of a breakdown in 2012 of an agreement between the two companies to form capital ties.
Lingering distrust over the previous collapsed deal was one reason for the government and Sharp officials initially supporting a rescue plan by state-backed Innovation Network Corp of Japan (INCJ).
INCJ's plan was seen as a way to prevent the company's technological expertise from being transferred to a foreign company. The fund had planned to merge Sharp's screen business with Japan Display, in which the fund owns a majority stake.
INCJ's plan looked set to succeed, but policymakers warmed to Foxconn's offer as a step towards bolstering foreign direct investment in Japan.
Foxconn's offer was also seen as beneficial for Sharp's creditor banks. The lenders are Mitsubishi UFJ Financial Group Inc's core unit Bank of Tokyo-Mitsubishi UFJ, and Mizuho Financial Group Inc's Mizuho Bank.
($1 = 112.47 yen)
(Reporting by Makiko Yamazaki and J.R. Wu Additional reporting by Taro Fuse, Joshua Hunt and Taiga Uranaka in Tokyo; Writing by Ritsuko Ando; Editing by Edwina Gibbs and Mike Collett-White)