Sharp Corp said it will continue negotiating a rescue plan with both Foxconn Technology Group (富士康) and the Innovation Network Corp of Japan (INCJ), and aims to reach a final decision on the competing offers within a month.
Sharp chief executive officer Kozo Takahashi yesterday told reporters that neither of the potential partners is preferred over the other at this point, contradicting several media reports.
Sharp’s board had earlier planned to make a decision yesterday on its favored bailout partner, people familiar with the matter had said.
“Both parties are on the same footing,” Takahashi said.
The battle has drawn attention as a test case of Japan’s willingness to open its economy, following Japanese Prime Minister Shinzo Abe’s appeal for market reforms and overseas investments to boost growth.
Struggling companies like Sharp — which has now lost money for five straight quarters — have long been able to rely on the nation’s government and banks for support.
Sharp shares soared yesterday after Japanese broadcaster NHK reported it planned to give preference to Foxconn and that the company had raised the value of its offer to more than ¥700 billion (US$5.9 billion). The stock gained 17 percent to close at ¥160 in Tokyo trading.
Last month, Foxconn Chairman Terry Gou (郭台銘) traveled to Japan and made a personal appeal to Sharp’s board, its major banks and government officials to win the deal. Though his company is offering more money, Sharp had been inclined to take the deal with INCJ, which offered about ¥300 billion, people familiar with the matter said last month.
“Both options have a good chance of turning Sharp around, but it’s very difficult to compare the two at this point,” Toshihiro Uomoto, the chief credit strategist in Tokyo at Nomura Holdings Inc, said prior to the announcement. “Foxconn’s acquisition is likely to come with all kinds of conditions. INCJ’s deal will also entail some restructuring.”
Takahashi said that the offer amount was not the only consideration and that losing propriety technology to a foreign company was not a factor in weighing the Foxconn deal.
Takahashi also said Sharp is “devoting more resources” to evaluating the Foxconn plan.
A deal with INCJ would allow Sharp to keep its technology within Japan and cooperate more closely with domestic companies, people familiar with the matter have said.
INCJ’s investment would be the most recent example of Japan’s government providing support to struggling domestic companies to keep technology out of the hands of foreign rivals.
Four years ago, INCJ created Japan Display Inc from the struggling screen units of Toshiba Corp, Sony Corp and Hitachi Ltd with a ¥200 billion infusion.
“We are seeking growth while keeping Sharp DNA intact, because breaking up the company isn’t good for anyone,” Takahashi said.
Sharp yesterday also reported its fifth straight loss today as it released financial results. The Osaka-based company had a net loss of ¥24.7 billion in the three months to Dec. 31, compared with with analyst estimates for a loss of ¥8 billion.
Gou is reportedly planning to travel to Sharp’s headquarters in Osaka again to meet with management and press his case for a proposed bailout of the Japanese consumer electronics company, according to a person familiar with the matter.
Gou asked for the session after Sharp told investors it planned to keep negotiating for another month with both Foxconn and INCJ, said the person, who asked not to be identified because the matter is private.
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