Hours after the board of Japan’s Sharp Corp. voted to let Foxconn Technology Group take control of the loss-making electronics giant, the Taiwanese firm said in a surprise reversal it would postpone signing a definitive agreement.
Foxconn, the name under which Hon Hai Precision Industry Co. Ltd. does business, cited “new material information”, Bloomberg reported.
Under an agreement announced by Sharp, Foxconn would boost its stake to 65.9 percent by spending 484.3 billion yen (US$4.3 billion) to buy additional Sharp shares.
Foxconn, the main assembler of Apple Inc.’s iPhone, put out a one-paragraph statement late Thursday after Sharp disclosed the terms.
It read in its entirety: “We acknowledge receipt of a notice today from Sharp’s board choosing us as their preferred partner. After receiving new material information from Sharp yesterday morning, we have accordingly informed Sharp last night [before their board meeting Thursday] that we will have to postpone any signing of a definitive agreement until we have arrived at a satisfactory understanding and resolution of the situation.”
The new information is a list of about 350 billion yen of contingent liabilities at Sharp, The Wall Street Journal reported, citing unnamed sources.
Sharp had no immediate comment on Foxconn’s statement.
“It’s odd that after chasing a company for four years you wouldn’t do your due diligence and find out about off-balance sheet contingent liabilities far ahead of striking a final agreement,” Bloomberg quoted Alberto Moel, an analyst at Sanford C. Bernstein & Co., as saying.
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