Foxconn spikes six-billion-dollar Sharp scoff – for now

The $5.6bn takeover deal for Foxconn to buy Sharp is on hold after the ailing Japanese company passed new information to its potential buyers at the last minute.

"Most of the contents of the material information Foxconn received on Wednesday morning, before Sharp's board meeting began on Thursday, had not been previously proposed nor offered during negotiations between the two sides," Foxconn told Reuters.

Sources familiar with the matter said that the hold may have come after Sharp revealed it had not told Foxconn about a few problems with its balance sheet – to whit, a 300 billion yen ($2.7bn) liability in its accounts.

Foxconn's founder Terry Gou and the Sharp CEO Kozo Takahashi have reportedly been having urgent meetings to discuss the issue. Foxconn said that consultations were ongoing "with the aim of reaching a comprehensive understanding and resolution of the situation. We hope to reach a satisfactory agreement as soon as possible."

Earlier this month, executives at both companies appeared to have signed off on the deal, which will see Sharp issue shares to Foxconn, giving the Chinese a 66 per cent stake and effective control of the firm. Sharp's stock price fell by a third as news of the hold leaked out.

Foxconn has been very keen to get hold of Sharp's assets, particularly its display technology. Sharp supplies some screens to Apple, a firm Foxconn is closely tied to, and the deal would give the Chinese company greater leverage over Cook & Co when it comes to pricing production.

The deal would also give Foxconn an instantly recognizable brand with which to sell products around the world. Foxconn isn't known much outside the technology industry, whereas Sharp is well known around the world and huge in Japan.

The deal now appears to be on hold for a week or two while the accounts are gone over with a fine-toothed comb. Provided everything checks out, the deal still looks set to go ahead. ®