Foxconn 'not aware' of Samsung, Sharp accord

Foxconn 'not aware' of Samsung, Sharp accord
PHOTO: Foxconn 'not aware' of Samsung, Sharp accord

TAIPEI, Taiwan - Foxconn yesterday declined to comment on reports of Samsung's intention to purchase a 3-per cent stake of Sharp Corp., stating that they were not aware of the situation until recently.

Negotiations will continue until the end of March as scheduled, according to Foxconn.

Foxconn had first expressed their intent to acquire a 10-per cent stake in Sharp in March last year, but negotiations have since fallen into stalemate.

Meanwhile, Samsung has expressed its intent to spend over NT$3.2 billion (S$133 million) for a 3-per cent stake in Sharp, representing an estimated cost of 342 yen (S$4.60) per share for the deal, according to reports.

The deal represents a much-needed financial boost to the struggling Sharp, and increased panel capacity, in addition to access to Sharp's advanced technology for Samsung, according to industry observers.

Currently, Sharp supplies high-resolution display panels for Samsung-branded thin-bezel TVs, and hopes to increase the utility rate of its plants in Japan, while Samsung will benefit from having a more stable panel supply to keep up with demand, according to reports.

The deal marks the second incidence where Sharp doled out an ownership stake for an infusion of capital, since Qualcomm purchased 5 per cent of Sharp at 164 yen (S$2.20) per share last December, following the stalemate in negotiations with Foxconn.

Foxconn's Misstep

Often described as a tale of a pair of spurned lovers in commentary, the deal between Foxconn and Sharp is one of the most storied acquisitions in Taiwan's tech sector.

Sharp's reluctance in agreeing to Foxconn's acquisition may be more complicated than a simple dispute on the agreed price, as Foxconn had tried to renegotiate their price as Sharp's share prices tumbled dramatically throughout last year.

According to commentary, the struggles of Foxconn in acquiring Sharp may be due to the strong commanding presence of Foxconn Chairman Terry Gou, who had directly expressed his intent to revamp Sharp's management. Foxconn, the world's largest electronics maker, prides itself on its managerial acumen, and had hoped to assert its vision of management unto Sharp, according to commentary, to which Sharp responded with adamant resistance.

To Sharp, acquisition deals are merely a means to trade an ownership stake and transferal of its proprietary technology for much-needed capital, according to commentary. Foxconn's intent on asserting its influence posed a severe transgression to Sharp, as giving up managerial control is not acceptable, and a shameful admission of defeat, according to commentary.

In contrast, the smooth transition of the ownership stake to Qualcomm may be indicative of Sharp's rationale, that deals may only concern matters of technology transfer and capital, but not managerial control.

Propelled by news of Samsung's intent, Sharp's shares surged 14 per cent during yesterday's session, gaining 42 yen (S$0.56) to close at 341 yen (S$4.55).

Foxconn shares were relatively unaffected by the news, with shares opening flat and closing with a modest 1.37-per cent gain, up NT$1.1 (S$0.05).

This website is best viewed using the latest versions of web browsers.