Foxconn buys Sharp for a fraction of the price discussed just last month
It’s not easy to negotiate a good deal when you come off years of bad investments, operating losses and strategic mistakes making you lose touch with market trends and innovations, so let’s not act surprised Sharp didn’t get the capital injection it once sought in a takeover agreement with Foxconn.
Not even close, in fact, as the world’s largest electronics contractor manufacturer pulled off the acquisition at a bargain price of 389 billion yen, down from the ¥700 billion it initially agreed to. That converts to roughly $3.5 billion, instead of $6.24B, which still sounds like a lot of dough, but it’s actually a smart investment in a declining yet potential-brimming brand.
Let’s not forget Sharp remains a respected producer of TVs, mobile phones and various appliances in Japan, while supplying a big chunk of the LCD screens used on recent iPhones. That latter business was probably the ultimate deal sweetener for Foxconn Technology Group, which already assembles iOS handhelds, but naturally fancies additional implication in the development process.
At the same time, the Taiwanese tech giant, also known as Hon Hai Precision, could be thinking of designing its own products from the ground up, and selling them itself too either under the Foxconn name or as Sharp. Now that’s got the potential to yield massive profits, though the fast-growing corporation is taking things gradually, and looking to “reach great heights” in three to five years.
For the time being, Foxconn has Sharp’s blessing to buy a controlling 66 percent stake in the 104 year-old Japanese company at 88 yen per share. Let’s see if Sharp can become great again under new management.