We have been hearing rumors for a while that Foxconn were looking at buying Sharp and earlier today Sharp announced that they had accepted a bid of 700 billion Yen ($6.24 Billion) from Foxconn.
The deal was about to go ahead, although it has now been delayed as Foxconn has received a list of ‘contingent liabilities’ from Sharp which are around 350 billion Yen.
Background of the Acquisition
Foxconn, also known as Hon Hai Precision Industry Co., Ltd., is a Taiwanese multinational electronics contract manufacturer. It is the world’s largest provider of electronics manufacturing services and the third-largest technology company by revenue. Sharp Corporation, on the other hand, is a Japanese multinational corporation that designs and manufactures electronic products. The acquisition of Sharp by Foxconn has been a topic of interest for many in the tech industry due to the potential synergies between the two companies.
The two companies have been in talks for some time, so it is expected that the deal will still go ahead, although there could possibly be some changes to it before it is final. The contingent liabilities that Sharp has disclosed are essentially potential future financial obligations that could arise from past events. These could include things like pending lawsuits, warranty claims, or other financial commitments that were not previously accounted for.
Implications of the Deal
If the deal goes through, it could have significant implications for both companies. For Foxconn, acquiring Sharp would mean gaining access to Sharp’s advanced display technology, which could be a strategic asset for Foxconn’s manufacturing operations. Sharp is known for its high-quality LCD panels, and this acquisition could help Foxconn enhance its product offerings and improve its competitive edge in the market.
For Sharp, being acquired by Foxconn could provide the financial stability and resources needed to continue its operations and invest in new technologies. Sharp has been facing financial difficulties for several years, and this acquisition could be a lifeline for the company.
However, the delay caused by the contingent liabilities could complicate the deal. Foxconn will need to carefully assess these liabilities and determine how they could impact the overall value of the acquisition. This could lead to renegotiations of the terms of the deal or even a potential reduction in the purchase price.
As soon as we get some more details on exactly what is happening in the deal between Sharp and Foxconn, we will let you guys know.
Source: The Verge
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