Hon Hai Precision, Sharp fail to strike ownership deal

The companies have been working to finalize a deal that would make Hon Hai the largest shareholder, with a minority stake in Sharp.


Hon Hai Precision Industry, the Apple supplier better known as Foxconn, couldn't reach a final agreement to acquire a stake in Sharp, according to a new report.

Hon Hai Chairman Terry Gou met with Sharp in Japan recently to try to hammer out a deal that would see his manufacturing company take a minority stake in Sharp. However, according to Reuters, which cited reports out of Japan, the companies could not reach an agreement.

Under terms of the so-far failed deal, Hon Hai would have become Sharp's largest shareholder.

The companies revealed in March that Hon Hai would buy around 11 percent of the struggling Sharp, as well as 46.5 percent of its LCD TV factory in Sakai, Japan. But as Sharp's shares continued to fall, Hon Hai wanted to renegotiate the deal, due to the fact that a key component in the agreement was the transfer of shares. Earlier this month, the companies tried to come to terms, but failed to do so, pushing back the discussion to now.

At the end of the second quarter, Sharp owned nearly $16 billion in debt. And due to sluggish financial performance, the company didn't have enough cash on hand to cover even its short-term obligations. In response, Sharp announced that it would lay off 5,000 employees and work on a restructuring plan. Its deal with Hon Hai would help it raise some much-needed cash and hopefully stay afloat.

Looking ahead, it's possible that the companies will try to find other options to finalize a deal. It's not clear, however, when that might happen.

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