MADISON, Wis. Ė The Nikkei, Japanís economic journal, reported Friday (Aug. 17) that Foxconn owner Hon Hai Precision Industry Co. is now asking to double its planned stake in Sharp Corp. to about 20 percent from the originally agreed 9.9 percent.
Neither Hon Hai nor Sharp is commenting at this point.
Announced this past March, the deal between the worldís largest contract manufacturer and Japanís leading LCD manufacturer has turned out badly for Sharp.
If Hon Hai has its way to increase its stake in Sharp over 10 percent, the Taiwan giant will get the right to ask a court to dissolve Sharp, thus allowing Hon Hai to increase its voice in controlling the ultimate destiny of one of the oldest Japanese companies. Hon Haiís new proposal, if true, is the worst case scenario for Sharp, who has been resisting at all cost to changing the terms of the original agreement.
Financially stricken Sharp may be left with little choice at this point as Japanese banks are breathing down their neck to close the capital infusion deal with Hon Hai.
The Taiwanese manufacturer is also asking Sharp to lower the price of the shares it will buy from the initially agreed 550 yen a share, because Sharp's stock price has sharply dropped below that level recently.
The Nikkei reported that Hon Hai apparently has requested cutting the price to about 200 yen per share, close to the current market price.
The Japanese newspaper also reported that Hon Hai may also ask to send in board members, in line with its request for a greater stake.
Under the basic agreement the companies reached on March 27, Hon Hai will take a leading 9.9% stake in Sharp by March 2013, buying the Japanese firm's stock at 550 yen per share. Under those terms, the Taiwanese company would spend approximately 67 billion yen on the deal.
Foxconn outfoxes Sharp's sharpest