Mon, Aug 06, 2012 - Page 13 News List

Sharp proposes price renegotiation with Hon Hai

By Lisa Wang  /  Staff reporter, with CNA

Hon Hai Precision Industry Co (鴻海精密) chairman Terry Gou (郭台銘) yesterday said Sharp Corp, not Hon Hai, had proposed renegotiating a reasonable price for a 9.88 percent stake that it plans to sell to the Taiwanese maker of Apple Inc’s iPad after shares in the Japanese company plummeted 65 percent over the past four months.

Gou was attempting to end speculation that the price renegotiation was an early sign of stress in the partnership between Hon Hai and Sharp. On March 27, Hon Hai agreed to pay ¥550 per share for a 9.88 percent stake in Sharp.

The price negotiation would not affect Sharp’s original plan to sell the stake to Hon Hai, Gou told Unique Broadcasting yesterday.

“As it will take some time for Sharp’s board to revise the letter of intent, I am worried that the share price [of Hon Hai] will fluctuate abnormally,” Gou told reporters after meeting Sharp executives in Japan.

He said the tie-up of Hon Hai and Sharp would benefit both companies.

Hon Hai is not required to book asset impairment losses from its holding of Sharp shares before publishing results, Gou said, adding that the renegotiation might take place in March next year. However, he said that the actual timetable has not been decided.

On June 24, Hon Hai said it would book a NT$6.4 billion (US$213 million) impairment loss on its investment in Sharp. Sharp’s share prices plunged 13.27 percent to ¥425 in Tokyo trading on June 22 from ¥490 on March 27, when the deal was made.

Hon Hai also said that Sharp had agreed to list the operator of its most advanced display factory on Taiwan’s stock exchange. The listing of Sakai Display Products, a Sharp subsidiary that operates a 10th-generation LCD plant in Sakai, Japan, is expected to take place in 2014, Gou said in a local TV interview.

The move will cut tax expenses for Sharp and Hon Hai, which have formed a capital and production tie-up, because there is a lower tax rate in Taiwan than in Japan, he said.

Gou also said the capacity utilization rate of the Sakai plant had increased to between 60 and 70 percent, adding that the figure would rise to 80 percent by the end of this year and to 100 percent next year, as Hon Hai is looking for more new customers for the plant.

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