Foxconn offers to buy Japanese electronics maker Sharp for $5.3 bn: report

Foxconn, the world's largest contract electronics maker, has offered to buy Japanese electronics maker Sharp Corp for ¥625 billion ($5.3 billion), The Wall Street Journal today reported, citing people familiar with the matter.

Japanese business newspaper Nikkei had earlier this week reported that Sharp was reviewing an over ¥300-billion takeover offer from Japanese government-backed investment fund Innovation Network Corp.

Foxconn, based in Taiwan and also known as Hon Hai Precision Industry Co, is offering more money for Sharp and is ready to take on all of its debt, the WSJ report said.

These sops are given to persuade Sharp's creditors to make a decision based on the economics of the transaction, rather than political considerations, the report added.

The Japanese government is worried about Sharp being taken over by an overseas company because of its technology in display panels. Innovation Network already holds a controlling stake in another Japanese display panel maker Display Inc.

Shares in Sharp surged by as much as 22 per cent in Tokyo following the reports.

Sharp, once Apple's largest supplier of display products, posted an annual net loss of ¥222 billion, bringing total losses in the past four years to ¥1.13 trillion ($10 billion) amid intense competition from local rivals like Panasonic, Sony and Japan Display and other Asian companies in its LCD business.

It has amassed losses ¥1.216 trillion from April 2011 to 30 September 2015.

The Osaka-based company in May sought $1.9 billion in its second major bank-led financing in three years in return it promised to axe 5,000 jobs, accounting for 10 per cent of staff as part of a restructuring plan which includes disposal of some non-core assets.

In March 2016 it will have to repay ¥510 billion in borrowings and its credit default risk remains the highest among Asian technology companies.

In 2012, Foxconn's chairman Terry Gou had acquired a 38-per cent stake in a Sharp display factory in Sakai, Japan.

Japan Display was spun off by Sony, Toshiba and Hitachi and is backed by a Japanese government fund, which holds a 36-per cent stake in the company.