Shares of Taiwan-based Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, bucked losses on the broader market as investors hoped it would resume talks on acquiring a stake in Japan’s Sharp Corp, dealers said yesterday.
The buying was also encouraged by a net buy in the stock by foreign institutional investors on Tuesday, when they were net sellers in the broader market because of a lackluster showing on Wall Street the night before, they said.
Hon Hai shares rose 1.18 percent to NT$94.4 yesterday, while the TAIEX dropped 0.66 percent.
“Many investors became more willing to buy into Hon Hai shares on the possibility of a resumption of negotiations on acquiring a stake in Sharp,” CMoney analyst Chen Wei-tai (陳維泰) said.
Chen said that if Hon Hai were to take a stake in Sharp, the precious intangible asset of the Japanese company’s brand name would enhance the Taiwanese company’s global visibility and also broaden its customer portfolio.
“The successful acquisition of a stake in Sharp would no doubt give a boost to Hon Hai’s future development. It’s not surprising that the stock appeared resilient this morning when the broader market trended lower,” Chen said.
In a recent interview published by Japan’s weekly Toyo Keizai, Hon Hai chairman Terry Gou (郭台銘) said that his company was ready to support Sharp financially, and that if Sharp president Kozo Takahashi wanted to see him to talk about a possible deal, he could fly to Japan at any time.
Hon Hai, which assembles iPhones and iPads for Apple Inc, agreed in March 2012 to buy a 9.9 percent stake in the financially troubled Japanese company for ￥66.9 billion (US$708 million).
However, the deal fell apart in 2013 after weak earnings reports sent Sharp shares into a tailspin. The negotiations also broke down over Sharp’s rejection of Gou’s request to have a say in the company’s management.
Serious obstacles remain to a potential rekindling of the deal.
Gou said that Hon Hai still wanted to join Sharp’s management if it were to invest in the Japanese company, while Sharp said Hon Hai would have to honor its commitment to acquire a stake in the company at ￥550 per share for negotiations to resume.
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