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Hon Hai plans to raise offer for Sharp by 40%: report

2016/01/15 18:26

Taipei, Jan. 15 (CNA) Taiwan-based Hon Hai Precision Industry Co. (鴻海), the world's largest contract electronics maker, is planning to raise its offer to acquire financially struggling Sharp Corp. of Japan by 40 percent, Japan's Yomiuri Shimbun newspaper said Friday.

The report said that Hon Hai, known as Foxconn outside Taiwan, is likely to raise the acquisition price to 700 billion Japanese yen (US$5.93 billion) from its previous offer of 500 billion yen.

The new offer will be equivalent to more than three times Sharp's market capitalization, based on the Japanese firm's closing price on Thursday, the report added.

In the wake of the report about the higher bid, share prices soared more than 14 percent on the Tokyo Stock Exchange Friday. However, in Taiwan, shares of Hon Hai fell 0.73 percent to close a

NT$75.30 (US$2.24), as the report of the higher offer failed to help the stock sustain its earlier gains.

The Yomiuri report said that Hon Hai wanted to use the raised bid to gain the upper hand during talks with Sharp. Japanese media had previously reported that the Innovation Network Corp. of Japan (INCJ), which is sponsored by the Japanese government, is also studying a buy-out deal to buy Sharp.

According to the Yomiuri report, if Hon Hai and Sharp fail to make any breakthrough in the negotiations with Sharp based on the raised acquisition price, Hon Hai is likely to consider the possibility of launching a tender offer to acquire the Japanese firm.

The report said the 700 billion yen offer will be the last bid to be presented by Hon Hai, an assembler of iPhones and iPads for Apple Inc.

Hon Hai agreed in March 2012 to buy a 9.9 percent stake in Sharp for 66.9 billion yen, but the deal fell apart in 2013 after a weak earnings report from the Japanese firm sent its shares into a tailspin.

The negotiations also broke down after Sharp rejected a request made by Hon Hai Chairman Terry Gou (郭台銘) to have a say in the company's management. Despite the failed bid in 2012, Hon Hai has still been looking to acquire Sharp.

The Yomiuri report said that Hon Hai has also proposed raising its stake in Sharp's flat screen plant Sakai Display Products in Osaka's Sakai City to more than 50 percent.

In July 2012, Gou, in a personal capacity, acquired a 37.6 percent stake in the advanced display panel plant from Sharp.

(By Yang Ming-chu and Frances Huang)ENDITEM/J