OSAKA – Top executives of Sharp Corp. and its Taiwanese business partner, Hon Hai Precision Industry Co., began two days of talks Thursday over how to revise the terms of their capital tieup.
Sharp President Takashi Okuda and visiting Hon Hai Chief Executive Officer Terry Gou are aiming to reach a conclusion regarding Hon Hai’s purchase of Sharp’s private equity issue.
The two sides were not able to reach a conclusion Thursday and will continue talks Friday.
Better known as Foxconn Technology Group, maker of Apple Inc.’s iPad and iPhone, Hon Hai said it “can’t fail” in the renegotiation of its proposed investment in Sharp.
Talks with Sharp, which is forecasting a second straight annual loss, haven’t reached a final stage, Tai Jeng-wu, vice president of Hon Hai, said Thursday in Sakai, Osaka Prefecture. Gou, the company founder, had been scheduled to speak at the news conference but he didn’t attend.
Hon Hai is renegotiating its March deal to take a 9.9 percent stake in Sharp for ¥67 billion after shares of the ailing Osaka-based electronics firm fell. Gou invested ¥66 billion of his own money in Sakai Display Products Corp. to jointly run the unit with Sharp and said he expects to sell shares to the public in Taiwan in 2014.
“We can’t fail in this tieup with Sharp,” Tai said. “But we will not rush into any decisions.”
Sharp and Hon Hai need to work around Japan’s high tax rate, strong yen and expensive labor force to make their tieup succeed, Gou, 61, said in Tokyo on Tuesday. He said he spoke with Okuda by phone the same day and was expected to meet with him Thursday evening or Friday.
The two executives haven’t met since March, Tai said.
Sharp widened its full-year loss forecast eightfold on Aug. 2 to ¥250 billion, more than its own market value, because it expects losses at its TV and LCD businesses to be worse than previously forecast. Its shares dropped 28 percent the following day to close at ¥192, 65 percent below the ¥550 per share Hon Hai agreed to pay for its stake.
Sharp is seeking to raise cash and cut costs as it faces ¥207 billion in debt repayments by September 2013. The firm will eliminate 5,000 jobs, its first workforce paring since 1950, as part of plans to reduce fixed costs by ¥100 billion, it said Aug. 2.
Hon Hai plans to invest in Sharp via its two Taipei-listed units, Hon Hai Precision Industry Co., the top contract maker of electronics, and Foxconn Technology Co., a computer case maker.
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