TOKYO, March 8 Hon Hai Precision Industry Co Ltd
will not invest in Sharp Corp by a March 26
deadline after the two firms failed to revise an earlier
agreement, although the Taiwanese company has not ruled out an
investment altogether, a newspaper said.
Hon Hai Chairman Terry Gou met Sharp's bankers to inform
them no deal would be struck this month but he would look at the
merits of an investment after the struggling Japanese display
maker unveils a new business plan in the near future, the Asahi
newspaper reported without saying where it got the information.
Talks for Hon Hai to buy as much as a 9.9 percent stake had
stalled after Sharp balked at its demand that it be given a
degree of management control.
Hon Hai also sought to lower the $708 million price tag
after Sharp's stock slumped in the wake of losses that prompted
a bailout from its banks last year.
Sharp's banks, which include Mizuho Financial Group Inc
and Mitsubishi UFJ Financial Group Inc, had
not been expecting a revised deal, sources told Reuters last
Sharp spokeswoman Miyuki Nakayama and a spokesman for Hon
Hai both said the two companies would continue to negotiate
until the deadline.
As talks with Hon Hai unravelled, Sharp concluded smaller
investment deals with Samsung Electronics Co Ltd and
Qualcomm Inc. It may also have to find other ways to
raise money to repay a $2.1 billion convertible bond due in
Sources at Sharp and its banks as well as analysts have told
Reuters they expect the company will resort to equity financing
to make up any shortfall after it adds up available cashflow and
gains from asset and stake sales.
Its scope for asset sales, however, is limited because it
had to mortgage nearly all its domestic factories and offices to
secure emergency bank loans. A junk credit rating makes bond
issues an expensive proposition for the Japanese TV pioneer.
Under the deal with Samsung announced this week, the South
Korean company will take a 3 percent stake for around $110
million and Sharp will supply it with screens for its TVs and
mobile devices. That deal followed an agreement in December for
Qualcomm to invest as much as $120 million.
Sharp is also in talks to sell its Chinese TV assembly plant
to Lenovo Group Ltd and to sell its Mexico factory to
Hon Hai, according to sources familiar with the discussions. Hon
Hai already owns a third of Japan's liquid crystal display plant
in Sakai western Japan, the world's most advanced display