Sharp Agrees But Foxconn Freezes

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Almost. The single terrible word that's left on the table after a deal falls through.

Sharp Big pad

Despite all odds, the Board of Sharp managed to approve the sale to Foxconn. For a whopping $5.5 billion.

And now, only a day later, in a written statement, Foxconn says it needs to delay completing the deal.

Foxconn wants to study “new material information” released by Sharp that (according to WSJ) includes another $3.1 billion in liabilities not previously disclosed.

How is that possible, you ask? You might expect a last-minute contingency list popping up in some deal where you were acquiring an automotive dealer or another small business. But in a world-class deal with world-calss advisors and all eyes across the world watching? And it's not a small list...it adds up to 50% of the entire accepted bid. How could the seller possibly hope to profit by such a maneuver?

"Delay the deal" could be code for "We will have to negotiate this." But the nearly $6 billion offer is already over the top and it seems unlikely Foxconn will take on much more in additional expenditure on this deal. (For example, Foxconn could have bought a profitable Ingram Micro for $6 billion.)

The deal, controversial in Japan, had a Chinese technology giant buying Osaka's most famous brand. Proponents argue this deal would finally show Japan's willingness to engage outside business, instead of sticking with their insular tradition of solving their own problems by government-led intra-Japan initiatives.

The competition for Foxconn was The Innovation Network of Japan whose goal seems to be to buy up Japan's shrinking CE industry and merge what remains into a national champion. Their bid was half of Foxconn's. Yep, just about the size of that contingency list now sprung on Foxconn. Odd, that coincidence.

Go more on the Sharp/Foxconn deal and what it means.