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Government approaches Hon Hai about Sharp tie-up, not outright rescue

Kyodo

The government and a state-backed fund have approached Taiwan’s Hon Hai Precision Industry Co. proposing a tie-up with Sharp Corp., sources said Wednesday.

The move is seen as an attempt by the government to nudge Sharp into accepting a rescue plan by the fund, Innovation Network Corporation of Japan, while showing a cooperative stance toward Hon Hai, which has tendered its own, larger offer. The government wants to keep Sharp’s advanced technology within Japan.

The chairman of the INCJ, Toshiyuki Shiga, said earlier this week that ¥300 billion in investment will be needed for Sharp, while Hon Hai is believed to have offered to purchase the Japanese company for around ¥600 billion.

Going by the trade name Foxconn, Hon Hai is the world’s leading player in contract manufacturing services for smartphones and home appliances. It has supplied Apple Inc. products such as the iPhone series.

The government apparently sees potential for Sharp to have a future partnership with Hon Hai, given its production capacity.

Still, it remains uncertain whether the Taiwanese company would accept the proposal, which was made Tuesday when a senior Japanese industry ministry official met with Hon Hai Chairman Gou Tai-ming, according to the sources.

The INCJ is considering taking ownership of Sharp by obtaining a majority stake and splitting off its loss-making liquid crystal display business.

The fund envisages integrating the unit with Japan Display Inc., in which it has a stake.