Tokyo: Sharp Corp climbed in Tokyo after completing the sale of a stake to Foxconn Technology Group, ending a four-month wait for the cash-strapped Japanese maker of flat panel televisions.
The shares jumped 10 per cent to 117 yen in Tokyo on Monday. The stock has risen 31.5 per cent in the past two days, the biggest two-day gain ever. The Osaka-based company also received a 300 billion yen (Dh10.9 billion, $2.96 billion) commitment line from its lenders.
Sharp agreed to a rescue package from Foxconn, choosing the Taiwanese company over a rival bid from the state-backed Innovation Network Corp of Japan in a take over battle that spanned four years. President Kozo Takahashi stepped down, to be replaced by Foxconn’s Tai Jeng Wu. Sharp’s liabilities no longer exceed assets after the 289 billion yen infusion, the company said.
“With the risk of insolvency removed, the shares have a strong upward momentum,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “How far they climb will depend on how Foxconn will choose to restructure Sharp. It’s not enough to optimise and cut costs, there needs to be a credible strategy for future growth.”
While Foxconn and Sharp agreed to the deal in April, it wasn’t until last week that antitrust authorities in China cleared the acquisition.
Display revenues
Sharp last month reported its seventh straight quarter of losses on shrinking sales of TVs and panels for smartphones and tablets. Display revenues plunged 38 per cent in the three months ended June 30, while those from consumer electronics declined 24 per cent.
The Japanese company has bet big on large-size screens, investing 1 trillion yen to build factories in Kameyama and Sakai. As liquid crystal display prices fell and the currency rose to a post-Second World War high, Sharp shifted attention to smaller sizes for high-end smartphones and tablets. It managed to capture Apple Inc as a customer, but orders were cut after it struggled to consistently deliver volumes.
Joining the world’s largest contract manufacturer will allow Sharp to invest in and “actively develop” new technologies in areas including communication, the Internet of Things, display, smart homes, solar energy and business solutions, the company said.
