Destiny takes a wrong turn for Sharp; the $5.5 billion massive deal seemed to be final for the Japanese consumer electronics company when the Hon Hai industries suddenly decided to postpone the acquisition. Hon Hai trades under the name of Foxconn; famously known as Apple contractor. The manufacturing giant has made products for companies like Sony, Nintendo, Amazon, Microsoft and Sharp too.
Sharp stated earlier that Foxconn would buy shares worth $5.5 billion. Foxconn suddenly called the deal off on Wednesday night, stating that they were reviewing certain information. However, the information it spoke of was not disclosed. While the hesitance of Foxconn comes to us as a surprise as it has been eyeing Sharp for past few years, questions are being raised as to why Sharp announced this deal when they knew Foxconn was not sure about the deal.
Taking over Sharp would have benefited Foxconn in many ways. Sharp’s profitable contracts to manufacture screens for iPhone from Apple would have helped Foxconn to expand its business and produce more products of its own.
Although Sharp has struggled financially, it boasts of a 100 year old trusted brand with products like printers, refrigerators, washing machines, air conditions, etc. the shifting trend in the recent business world has made it difficult for the company to adjust as the market seems to be flooded with Chinese and South Korean competitors manufacturing low-cost products. Its biggest loss that it has been trying to restructure was its investment in the big LCD TV sets. In last nine months of 2015, Sharp posted a net loss of around $960 million.
Sharp was also in talks with a Japanese government back consortium of investors (Network Corporation of Japan), who wanted to keep the ownership in Japanese hands. Sharp later on decided to go with Foxconn’s proposal.
Foxconn and Sharp refrained from giving any immediate comments.