Foxconn Technology Group (富士康) and Sharp Corp are aiming to sign their US$6 billion takeover agreement as early as Monday after deciding the deal will not require major changes, according to people familiar with the matter.
The two sides have been going through a list of potential liabilities and concluded they will be much less than initial concerns that they could exceed ￥300 billion (US$2.6 billion), said the people, who asked not to be identified because the matter is private.
That would pave the way for Foxconn — known as Hon Hai Precision Industry Co (鴻海精密) in Taiwan — to proceed with its proposed deal of paying about ￥500 billion for a majority stake in Sharp, along with additional payments for preferred shares.
Foxconn chairman Terry Gou (郭台銘) has pursued Sharp since at least 2012 and had appeared on the verge of grasping his prize when the Japanese company’s board approved his deal last week.
However, Foxconn a few hours later said it would postpone the final agreement until it had gotten to the bottom of material new information provided by Sharp just a day earlier.
That information is about contingent liabilities that the company could incur through layoffs or restructurings, people familiar with the matter have said.
Sharp has been losing money for years. The company’s cash totaled ￥208.5 billion at the end of December last year, and it is projected to lose more than ￥100 billion in the fiscal year that ends this month, according to data compiled by Bloomberg.
Sharp also faces the expiration of ￥510 billion in credit lines and loans on March 31. The company’s banks have pushed for a bailout agreement before those loans are renewed, people familiar with the matter have said.
The banks, Mizuho Financial Group and Mitsubishi UFJ Financial Group, could finish the renewals by the deadline if Sharp and Foxconn reach final terms next week, the people said.
Terms for Sharp’s creditors may be revised from the original takeover agreement, the Wall Street Journal reported yesterday, without specifying what those changes could be.
Japan’s Sankei Shimbun also reported that Foxconn is likely to sign a bailout agreement with Sharp on March 9.
Citing sources close to the deal, the paper said the Taiwanese firm is expected to complete a review of Sharp’s assets by March 7 and sign the final deal two days later at the earliest.
Foxconn declined to comment, repeating its Feb. 28 statement that neither side has set a signing date and are working to reach a satisfactory agreement.
Sharp spokesman Yoshifumi Seki also declined to comment.
Sharp shares rose 9.4 percent to ￥151 at the close of trade in Tokyo, while Hon Hai rose 2.98 percent to close at NT$82.90 in Taipei trading.
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