Sharp – Foxconn Deal Controversy: Buy-out Gone Awry
This Thursday, Feb. 25 the net went buzzing as news of the Japanese Tech firm, Sharp, accepting a multi-billion dollar buyout from Taiwanese company Foxconn came out. But just as the long time takeover is set to be finalized, the Taiwanese firm suddenly stalls at the last minute and the Sharp – Foxconn deal was halted. The controversial takeover, or not, has now gained the attention of the public. But how did this came to be?Advertisement
Sharp, for the past year, has been in financial trouble but somehow, they still manage to continue have a visible consumer electronics business particularly with TVs. The Japanese company is also known for supplying a range of components for several top tech companies, which is where Foxconn has its sights.
The Taiwanese firm, which is known also as Hon Hai Precision, has been eyeing the Japanese electronics because it is the top producer of display panels, which Foxconn happens to be still outsources from third parties, reports Tech Crunch.
Some reported that if Foxconn manages to acquire the tech firm, it could be a notably a big gain for the company. And finally after years of negotiating, Sharp has agreed to accept the buyout deal. The deal, which is worth about $6.2 billion USD, was agreed on during a Sharp board meeting this Thursday and was announced the same day, reports The Guardian.
However, just as the deal was announced to be accepted by Sharp and to be closed by Foxconn, the Sharp – Foxconn deal was suddenly brought to a standstill. The latter hesitated and put the takeover on hold. The reason for the delay according to sources is because it has discovered previously undisclosed liabilities.
This discovery has thrown doubt to the buyout. Later on, the Taiwanese firm released a statement explaining that it would not sign the deal until it had clarified terms in new material information from Sharp. Reuters reports that according to sources, the “Japanese group had contingent liabilities that amounted to hundreds of billions of yen.”
And that has to be resolved first before the Sharp – Foxconn deal can push through and be finalized. The sources however did not give any additional information regarding the issue such as the exact amount or where the liabilities came from.
Both companies involved have since ceased to talk to the public. They have also declined to comment on the matter.
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