Bloomberg News

Sharp Drops as Hon Hai Investment Prospects Fade: Tokyo Mover

February 24, 2013

Sharp Corp. (6753) fell the most in two months in Tokyo trading as two people familiar with investment talks between the company and Foxconn Technology Group said discussions will probably end March 26 without an agreement.

The Japanese television maker, which said last year there was “material doubt” about its ability to survive, fell as much 5.5 percent to 293 yen, headed for the biggest decline since Dec. 25. The benchmark Nikkei 225 Stock Average rose 2 percent as of 9:09 a.m. local time.

Negotiations haven’t led to a deal partly because the companies can’t agree on a price after Sharp’s shares declined, said one of the people, both of whom asked not to be named because the talks are private. Management control and company strategy are also stumbling blocks, one person said. Sharp said in November talks might continue beyond March.

Sharp, Japan’s largest maker of liquid-crystal displays, is trying to raise funds as it forecasts a record full-year loss of 450 billion yen ($4.8 billion) amid weak demand for its panels and TVs. Foxconn, founded by billionaire Terry Gou, initially agreed in March to buy a 9.9 percent stake in Osaka-based Sharp for 550 yen a share. The deal foundered as Sharp’s shares plunged for seven straight months, reaching as low as 143 yen. Foxconn said it would renegotiate the price.

The Mainichi newspaper reported Feb. 23 Sharp may suspend the share-sale talks, without saying where it got the information. The Sankei newspaper said the electronics maker is considering measures including a public share sale to raise capital by about 200 billion yen, without citing anyone.

Talks Ongoing

Miyuki Nakayama, a Tokyo-based Sharp spokeswoman, said the company wasn’t the source of either report and that no decisions have been made on ending negotiations with Foxconn or on selling shares.

Sharp shares plunged 55 percent to 303 yen in Tokyo in 2012 amid widening loss forecasts. The company has reduced its workforce, sold assets and mortgaged its headquarters to refinance debt after posting a record 376 billion-yen net loss in the fiscal year ended March 31.

“Discussions are ongoing,” Louis Woo, a spokesman for Taipei-based Foxconn, said by phone on Feb. 23. “We are not bound by any timetable.”

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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