Sharp Corp yesterday said it has received a capital injection from Hon Hai Precision Industry Co (鴻海精密) and will hold a board meeting today to officially nominate Hon Hai vice chairman Tai Jeng-wu (戴正吳) as its new president.
Sharp’s announcement came after Hon Hai on Thursday night said that following months of waiting it has obtained the Chinese anti-monopoly watchdog’s approval to acquire Sharp.
Hon Hai agreed in March to acquire Sharp for ¥388.8 billion (US$3.9 billion), with plans to turn around the legendary but struggling Japanese brand.
It was the first foreign takeover of a major Japanese electronics producer.
Sharp yesterday confirmed that it has received the funds from Hon Hai, which allows the Taiwanese firm to secure a 66 percent stake in Sharp, according to a press statement by the company.
The company said a share issue to complete the transaction would take place “as soon as possible.”
Sharp president and chief executive officer Kozo Takahashi retired from the board, effective yesterday, while the executive officer and head of corporate strategy and management unit Hiroyuki Fukui is to retire from his post, effective on Monday, the company said.
Following Hon Hai’s capital injection, Sharp said it also completed a new syndicated loan of ¥300 billion with the Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank, with each bank providing ¥150 billion to the company.
Shares of Hon Hai dropped 3.69 percent to close at NT$86.2 in Taipei trading yesterday, after the company on Thursday posted the weakest quarterly earnings results since the second quarter of 2013.
During the April-to-June period, Hon Hai’s net profit fell 31.15 percent from last year’s NT$25.68 billion to NT$17.68 billion (US$818 million to US$563 million), and declined by 35.84 percent from the previous quarter’s NT$27.56 billion, the company said.
Hon Hai attributed the weak earnings performance to the company’s declining revenue scale and a unfavorable product portfolio.
Gross margin dropped to 6.02 percent last quarter, 1.2 percentage points lower than last year’s 7.2 percent and 1.03 percentage points lower than the previous quarter’s 7.05 percent.
Operating margin also contracted to 2.26 percent last quarter, 1.14 percentage points lower than last year’s 3.4 percent and 1.43 percentage points lower than the previous quarter’s 3.69 percent, company data showed.
Both gross margin and operating margin were at their lowest since the second quarter of 2013, data showed.
Analysts said the fall in margins reflected a slowdown in sales suffered by Hon Hai’s major client Apple Inc, as the US company has been pressuring its suppliers, including Hon Hai, to cut prices to offset the impact of weaker sales.
However, Hon Hai’s smaller bottom line also reflected the company’s increased research and development spending in the second quarter, along with seasonal factors, other analysts said.
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