According to a new report by Wall Street Journal, , Foxconn believes this transaction will improve its position on the technology value chain and has plans to expand Sharp’s production capacity and invest in the production of OLED screens that future iPhones are expected to adopt.
The two companies’ boards have now officially approved a plan for Foxconn to buy Sharp, which is 103 years old, for 389 billion yen (about $3.5 billion), which is a nearly $2.5 billion haircut from its original offer price in order to reflect Sharp’s previously undisclosed contingent liabilities, or future financial risks.
From the report:
Today both Foxconn and Sharp are pleased to announce the historic strategic alliance of two global technology leaders. The culture of both of our companies is defined by hard work, creativity and innovation. We are committed to restoring profitability and strengthening operations to once again make Sharp a leader in the global electronics arena and a world-class company with a positive outlook. Both our teams are on the same page working towards the same goal.
Terry Gou, Founder and CEO of Foxconn, said, “I am thrilled by the prospects for this strategic alliance and I look forward to working with everyone at Sharp. We have much that we want to achieve and I am confident that we will unlock Sharp’s true potential and together reach great heights.â€
Sharp will issue new shares to Foxconn which will give that company a 66 percent stake in Sharp. A definitive agreement for the deal is set to be signed on Saturday, with Sharp shareholders expected to vote on the deal at an annual meeting. The deal also gives Foxconn the power to appoint up to two-thirds of Sharp’s board.
The report cites people familiar with the deal as saying that Foxconn is planning on expanding Sharp’s screen production capacity, including investing in production of OLED panels that Apple is expected to use in future iPhones.
[WSJ]
