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Hon Hai reportedly raises offer for Sharp

Hon Hai reportedly raises offer for Sharp

Taipei, Jan. 30 (CNA) Taiwan-based electronics giant Hon Hai Precision Industry Co. is raising its bid to buy Japan's financially troubled Sharp Corp., showing the Taiwanese firm's determination to cut a deal, according to international business wires.

The Wall Street Journal cited sources close to the deal as saying that Hon Hai, also known as Foxconn outside Taiwan, has raised its bid for Sharp to 659 billion Japanese yen (US$5.44 billion) from the previous offer of 625 billion yen.

Another report by the Financial Times even said that Hon Hai, which assembles iPhones and iPads for Apple Inc., is planning to raise its offer to 700 billion yen.

Speculation of a higher bid for Sharp from Hon Hai came after the Innovation Network Corp. of Japan (INCJ), which is sponsored by the Japanese government, has not yet finalized its bailout proposal for the ailing Japanese electronics firm. Previously, the market had thought that Sharp would accept INCJ's offer.

A move by Hon Hai to raise its offer is aimed at gaining the upper hand in its negotiations on a potential deal to acquire Sharp by fending off the INCJ's bid.

Japan-based Jiji Press said that Terry Gou, founder and chairman of Foxconn, would visit the headquarters of Sharp located in Kansai on Saturday. The report said that Gou would directly meet with high rankings executives of Sharp to propose a raised bid and detail his new offer.

According to the Wall Street Journal, Hon Hai is planning to inject 389 billion yen into Sharp in exchange for new shares, which will allow the Taiwanese firm to own about two-thirds of the stake in the company.

In addition, Hon Hai would like to spend 225 billion yen to buy Sharp's preferred shares owned by the Japanese firm's two major lenders: Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc., the Wall Street Journal said.

The report added that Hon Hai's rescue proposal will include a plan for the potential Taiwanese suitor to spend 45 billion yen to raise its stake in a flat screen plant of Sakai Display Products (SDP) in Osaka's Sakai City, which is jointly owned by Hon Hai and Sharp.

In July 2012, Gou, in a personal capacity, acquired a 37.6 percent stake in the advanced display panel plant from Sharp, which also currently holds a 37.6 percent share. Japanese media reports have said that Gou is planning to raise his stake in SDP to more than 50 percent.

In addition to meeting with Sharp officials, Gou reportedly visited two officials from Japan's Ministry of Economy, Trade and Industry in Tokyo on Tuesday, to express Hon Hai's willingness to provide a bailout plan for Sharp. Hon Hai agreed in March 2012 to buy a 9.9 percent stake in Sharp for 66.9 billion yen, but the deal fell apart in 2013 after a weak earnings report from the Japanese firm sent its shares into a tailspin.

The negotiations also broke down after Sharp rejected a request made by Gou to have a say in the company's management. Despite the failed bid in 2012, Hon Hai has still been looking to acquire Sharp.

Analysts say Gou is eager to benefit from Sharp's technological know-how in building quality flat panels. Foxconn currently mainly manufactures smartphones, computers and other electronic gadgets for other brands in addition to Apple. (By Jalen Chung and Frances Huang)