Japan government aims to beat Foxconn to $5.1bn Sharp takeover

21 Jan 2016

Showing the changing tides of Asian wealth, the Chinese manufacturing powerhouse of Foxconn has reportedly submitted a bid of $5.1bn for struggling Japanese tech giant Sharp.

Foxconn has for some time now been recognisable as the Chinese company responsible for producing the iPhone en masse, which has provided it with considerable wealth and, if reports from inside the company are true, it is looking to Japan for expansion.

While not suggesting any intentions to become a direct seller on the market, sources within the company say that the potential 600bn yen ($5.1bn) purchase of Sharp would give them access to a wider range of components for the future manufacture of mobile phones, which remains its key market.

If this purchase were to go through, it would be Foxconn’s largest-ever acquisition of another company, but the company will now be left waiting until the end of the month to hear back from Sharp in Japan as to whether the deal is considered in its interest.

Sharp saddled with debt

From a financial standpoint, Sharp finds itself in a position whereby it is considerably overburdened with debt, with estimates suggesting its debt may be  as high as nearly 800bn yen following four years of losses totalling 1.1trn yen.

However, Sharp finds itself not completely at the mercy of the Chinese manufacturer as it is also understood that it is pondering a bid from the Japanese government-funded Innovation Network Corporation of Japan (INCJ), which has offered somewhere in the region of 300bn yen in a bid to prevent it from falling into foreign hands.

Sharp found itself in a similar position a few years ago in 2012 when Foxconn offered an investment deal, which eventually collapsed, but this now marks the Chinese company’s first attempt to take total control of Sharp.

Sharp sign image via Shutterstock

Colm Gorey was a senior journalist with Silicon Republic