Sharp Board Under Pressure to Consider Taiwanese Bid

TOKYO—The board of Sharp Corp. is scheduled to meet Thursday to weigh competing takeover offers from a Japanese government-backed investment fund and Foxconn, but it is under growing pressure to postpone a decision to examine the Taiwanese electronics assembler's bid more closely, according to people familiar with the situation.

One person briefed on the situation said Wednesday that at least some of Sharp's outside directors were pushing fellow board members to take another look at Foxconn's bid, which is higher than the offer from the government-backed investment fund known as Innovation Network Corp. of Japan.

Though Foxconn has offered more than twice as much as the fund, people familiar with the situation have said the fund holds the inside track because Tokyo is reluctant to let Sharp's expertise in making smartphone screens fall into foreign hands.

But Foxconn Chief Executive Terry Gou traveled to Japan last week to make a personal appeal for his bid, which Foxconn raised last week to ¥ 659 billion ($5.5 billion), according to people familiar with the matter. That compares with an offer from INCJ that these people say is worth no more than ¥ 300 billion.

Sharp and INCJ declined to comment. Foxconn, which is formally known as Hon Hai Precision Industry Co., wasn't immediately available for comment.

Sharp's lenders, Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc., were also asking the board to give the Foxconn offer another look, another person familiar with the situation said. One person said Sharp had not presented a decision to the banks as of Wednesday and said there is no guarantee that the company will choose or announce a winner Thursday.

Company executives and other insiders outnumber outside directors on Sharp's board by 8 to 5, so they could easily outvote the outsiders. But new regulations, adopted in the wake of high-profile accounting scandals in Japan, urge companies to pay more attention to outside directors in an effort to improve governance.

Sharp is under growing financial pressure because of a downward spiral in the price of liquid display panels, caused by a slowdown in the growth of smartphone sales and rising competition from South Korean, Chinese and other producers. The company's consumer electronics and appliance operations were already troubled, and Sharp has turned to its banks for bailouts twice in less than four years.

Sharp is set to report quarterly earnings Thursday, and analysts expect the figures to deepen the company's predicament. They expect Sharp to forecast a record net loss for the full financial year ending March 31. According to 11 analysts surveyed by FactSet, Sharp is expected to report ¥ 691.1 billion in revenue and ¥ 7.2 billion in profit for the October-December period, down from revenue of ¥ 762.7 billion and profit of ¥ 22 billion a year earlier.

The Japanese government wants to support its struggling electronics industry and considers liquid crystal displays a strategic industry, analysts say. INCJ, which is majority owned by the government and overseen by the Ministry of Economy, Trade and Industry, is also the largest shareholder in Japan's other major LCD provider, Japan Display Inc.

Japan Display was formed through a merger of the troubled LCD units of Sony Corp., Toshiba Corp. and Hitachi Ltd. The fund also stepped in to rescue Renesas Electronics Corp., which fused together the semiconductor businesses of Hitachi, Mitsubishi Electric Corp. and NEC Corp.

Both Sharp and Japan Display supply smartphone display panels to Apple Inc., and government officials and analysts have said there could be synergies to combining their operations. But Foxconn's Mr. Gou has also pitched potential synergies, touting the potential benefits of bringing Sharp's panel business under the same corporate umbrella as the biggest assembler of iPhones and tapping into Foxconn's extensive connections to other smartphone providers.

Foxconn has offered to assume Sharp's bank debts, which total about ¥ 700 billion, people familiar with the situation have said.

Wayne Ma in Hong Kong and Eva Dou in Beijing contributed to this article.

Write to Eric Pfanner at eric.pfanner@wsj.com, Takashi Mochizuki at takashi.mochizuki@wsj.com and Atsuko Fukase at atsuko.fukase@wsj.com

(END) Dow Jones Newswires

February 03, 2016 06:45 ET (11:45 GMT)

Renesas Electronics (PK) (USOTC:RNECY)
過去株価チャート
から 11 2024 まで 12 2024