LONDON – Sharp Corp., Japan's largest liquid crystal display maker, is ready to renegotiate the terms of what is effectively a bail-out package from Taiwan's Hon Hai Precision Industry Co. Ltd. (known as Foxconn), according to a Taiwan Economic News report.
This comes after Sharp posted a large first fiscal quarter loss and announced its intention to cut 5,000 jobs by the end of the fiscal year at the end of March 2013.
Terry Gou, the outspoken chairman of Hon Hai Group, said that moves to renegotiate the price for Hon Hai buying into Sharp were raised by Sharp executives themselves, according to a Taiwan Economic News report.
Earlier this year it was revealed that Sharp Corp., had negotiated a buy-in by Taiwan's Hon Hai Precision Industry Co. Ltd. (known as Foxconn) in return for the transfer of some technology to Foxconn plants in China.
The plan was for Sharp to transfer the company's advanced, small-to-medium LCD panel technology to a Hon Hai fab under construction in China’s Sichuan province. Hon Hai was expected to pay about $850 million in return for a 9.98 percent stake in the company. In addition Gou invested his own money into Sharp's Sakai fab known as S10 – gaining a 46.5 percent share. The Sakai S10 fab, opened in 2009, is capable of handling super large glass substrates.
However, the original buy-in was negotiated with Sharp shares at price of 550 yen per share and they are now trading at below 200 yen per share.
Guo said that he had not expected Sharp's huge loss in the recent quarter but also he had not asked Sharp to renegotiate the price. He said Hon Hai would get involved in the management of Sharp as this would improve Sharp's business position, according to the report.
S10, the tenth generation plant in Sakai near Osaka that is effectively now a joint venture between Guo and Sharp, has received permission to list on the Taiwan stock exchange. Guo said that could happen in 2014, the report said.Related links and articles:
Sharp to slash 5,000 jobs
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Sharp to transfer LCD technology to Hon Hai’s China plant