Contract manufacturer Foxconn is expected to reduce its offer for troubled Japanese electronics maker Sharp by about JPY100 billion ($898 million) to JPY390 billion, Japan’s Jiji News reported.
Foxconn, also known as Hon Hai Precision, is looking to lower its offer of JPY118 per share by about 20 per cent. The Taiwan firm also is holding talks with Mizuho Financial and Mitsubishi UFJ Financial to reduce the interest rate on Sharp’s JPY510 billion in credit lines and loans due at the end of the month, the Nikkei said.
Sharp is planning a board meeting to make a decision on the new offer by the end of the month.
A decision on the original deal, valued at about JPY489 billion, was expected to be made in late February but was delayed because Foxconn was reviewing the bid after the disclosure of a list of contingent liabilities of about JPY300 billion as well as the deterioration of Sharp’s earning for the fiscal year ending 31 March.
Sharp is forecasting an operating profit of JPY10 billion for the year ending March 31 but didn’t give guidance on its net income. Bloomberg expects it to report a net loss of JPY23.9 billion for the January-March period.
In early March Japanese banks Mitsubishi UFJ Financial and Mizuho Financial said they were willing to give additional aid to the takeover. Sharp has a total JPY700 billion in interest-bearing debt.
Sharp said earlier it would issue about $4.5 billion in new shares to give Foxconn a two-thirds stake.
In early February Sharp said it is “devoting more resources to checking Foxconn’s offer” over a rival bid by Innovation Network Corp of Japan (INCJ).
INCJ reportedly was offering less than half of what Taiwan’s Foxconn has put on the table, but Sharp was initially leaning towards INCJ because its display technology would remain in Japanese hands.
Sharp first began talks with firms over its display unit after troubling results in last October, blaming falling Chinese demand.
This is not the first time Foxconn has made a bid for the Japanese company. Back in 2012, Foxconn tried to acquire a 10 per cent stake in Sharp, but the deal fell through.