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Hon Hai shows interest in buying Sharp's TV plant in Mexico

2012/12/28 20:36:52

Taipei, Dec. 28 (CNA) Hon Hai Precision Industry Co., the world's largest contract electronics maker, has expressed relatively high interest in acquiring Japan-based Sharp Corp.'s TV assembly plant in Mexico, sources from Hon Hai said Friday.

The sources said the Mexico plant was more attractive to Hon Hai as a buyout target than two other Sharp TV assembly plants in China and Malaysia.

They made the comments after it was reported that Hon Hai has suspended a plan to buy Sharp's TV assembly plant in Nanjing after taking the price and other conditions into account.

The reports said the talks on the possible acquisition of Sharp's TV plant in Malaysia have also stalled.

The setbacks came after Hon Hai reportedly agreed earlier this month to spend 55 billion Japanese yen (US$637 million) to acquire the three TV assembly plants in China, Malaysia and Mexico. Sharp has another overseas TV plant in Poland.

The reports described the sale of the three TV plants as part of financially troubled Sharp's restructuring efforts.

Hon Hai Precision has declined to formally comment on the TV plant acquisition plans.

The sources said Hon Hai is most interested in the Mexico plant because of its close geographical proximity to the Latin American market, which the company is eager to penetrate in the future.

They stressed that the possible acquisition of the TV plants from Sharp and the two companies' existing commercial cooperation are not related and that the collaboration will continue regardless of the outcome of the acquisition plan.

Hon Hai has launched 60-inch LED TVs in the Taiwan, United States and China markets that use flat panels produced at Sharp's 10th generation plant in western Japan, in which Hon Hai Chairman Terry Gou owns a 46.5 percent stake.

In addition, the two companies have worked with each other to sell Sharp-made smartphones through Hon Hai's distribution network.

Commtiva Technology, a Hon Hai retail arm, has served as a sales agent for Sharp's smartphones in Taiwan, Singapore, and Malaysia. The distributor is also planning to sell Sharp's smartphones in Indonesia in the near future.

In March, Hon Hai and Sharp signed an agreement to buy a stake in Sharp for 67 billion Japanese yen, or 550 yen per share.

But a steep decline in Sharp's share price after that led the two companies to begin renegotiating the terms of the deal, including the acquisition price, in August.

The negotiations have yet to reach a conclusion, and the market is watching closely to see how the situation pans out.

(By Jalen Chung and Frances Huang)