Tue, Sep 04, 2012 - Page 13 News List

Sharp president coming for Hon Hai talks: report

SHAKY ALLIANCE:Takashi Okuda hopes to finalize the deal to strengthen its case and gain additional credit from banks to aid its restructuring, a daily said

Staff writer, with CNA

Sharp Corp president Takashi Okuda will visit Taiwan this week in hopes of finalizing the company’s planned alliance with Hon Hai Precision Industry Co (鴻海精密), the Japanese daily Sankei Shimbun reported yesterday.

The two companies are holding talks to set a date for Okuda’s meeting with Hon Hai chairman Terry Gou (郭台銘) in Taipei to flesh out the terms of the planned partnership, the business daily said.

Hon Hai, the world’s largest contract electronics manufacturer, agreed in March to buy a 9.9 percent stake in the struggling Japanese company for about US$800 million, or ¥550 per share. However, the company has asked to renegotiate the terms of the deal after Sharp’s stock plunged steeply since then, falling to ¥186 yesterday.

Gou was in Japan last week to clinch the alliance, but he abruptly canceled his scheduled meeting with Okuda on Thursday and instead returned to Taipei that day, according to the Sankei Shimbun, sparking speculation that the deal was in tatters.

The breakdown in talks resulted from the competing visions the two companies have for a potential alliance, which Gou told reporters when he arrived in Japan last week was far more important than the final price Hon Hai would pay for a stake in the company.

Okuda was quoted in a Sunday report by Japanese daily Nihon Keizai Shimbun that Gou seems to be more keen to participate in Sharp’s business than to deal with issues regarding the acquisition price and shareholding ratio.

According to Okuda, Gou is hoping to forge a strategic alliance with Sharp, but the Japanese company only wants to form a capital alliance with Hon Hai, which is also known as the Foxconn Technology Group (富士康科技集團).

In terms of the deal itself, the Sankei Shimbum said Sharp intends to bridge the price gap resulting from drops in its stock price by selling its TV plants in Mexico and China to Hon Hai.

Hon Hai, however, wants to expand its cooperation with the Japanese company, including having Sharp supply patented technologies, the paper said.

Because uncertainties over the deal could complicate Sharp’s efforts to obtain additional credit from main creditor banks to help finance restructuring costs for its LCD and TV operations, Sharp wants to conclude the new round of negotiations with Hon Hai as soon as possible, the Sankei Shimbun said.

However, it remains unclear how willing it is to hand over some degree of operational control to Hon Hai and its chairman.

Pressured by the yen’s strength and intense competition from South Korean and Chinese rivals, Sharp’s mainstay businesses — liquid crystal displays, LCD TVs and solar panels — are all unprofitable.

However, it still enjoys at least two niches in the flat panel industry — AMOLED technology and 10th-generation flat-panel manufacturing expertise, industry analysts say.

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