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Sharp to favor government-backed rescue plan over higher Foxconn offer

Sharp to favor government-backed rescue plan over higher Foxconn offer
Published by
Bloomberg

21 January 3.23pm

Hargreaves Lansdown is not responsible for this article's content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest. Article originally published by Bloomberg.

Sharp Corp. is leaning toward accepting a rescue by government-backed Innovation Network Corp. of Japan over a potentially larger offer from Taiwan’s Foxconn Technology Group, according to two people familiar with the talks.

A deal with INCJ would allow Sharp to keep its technology within Japan and to cooperate more closely with domestic companies, said the people, who asked not to be named because the matter is private. The fund hasn’t yet made an official offer and there is no guarantee a definitive agreement will be reached, the people familiar said.

INCJ may invest about 300 billion yen ($2.6 billion), splitting the funds between Sharp’s LCD panel business and remaining operations, one of the people said. Foxconn has offered about 600 billion yen to buy the company and expects a decision this month, a separate person familiar with the talks 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 struggling screen units of Toshiba Corp., Sony Corp. and Hitachi Ltd. with a 200 billion yen infusion.

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“There is only one option - when was the last time a Japanese company in good shape or bad was allowed to sell its technology to another Asian company?” said Atul Goyal, an analyst at Jefferies Group LLC.

Sharp’s stock climbed as much as 25 percent in Tokyo after news of Foxconn’s offer on Thursday. Shares closed 5.8 percent higher at 128 yen. Sharp lost 62 percent of its value since 2013. Goyal, together with 13 out of 15 analysts tracked by Bloomberg, recommends selling the shares.

INCJ didn’t return phone calls seeking comment.

“We’re talking with several companies about the structural improvement of liquid-crystal-display business. We don’t comment on the details of individual talks,” said Yoshifumi Seki, a spokesman for Sharp.

With assistance from Tim Culpan and Shingo Kawamoto. This article was written by Pavel Alpeyev, Shigeru Sato and Takashi Amano from Bloomberg and was legally licensed through the NewsCred publisher network.

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Article originally published by Bloomberg. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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