Foxconn wants to lower offer for Sharp

Foxconn wants to lower its takeover offer for Sharp in light of new risks.

Reuters reports:

Taiwan's Foxconn aims to lower its offer for Japan's Sharp Corp (6753.T) by at least around 100 billion yen ($893 million) to account for likely worse than expected annual earnings at the loss-making electronics firm and for newly revealed risks, two sources said on Tuesday. Sharp late last month said it would issue around $4.4 billion worth of new shares to give Foxconn, formally known as Hon Hai Precision Industry Co (2317.TW), a two-thirds stake. The investment in Sharp's equity is part of a deal estimated to be worth $5.8 billion. But the Taiwanese company put its takeover bid on hold at the eleventh hour after the Japanese company revealed previously undisclosed potential liabilities. It also demanded more information about Sharp's recent business. Sources familiar with the situation said Sharp was likely to book an operating loss in the tens of billions of yen for the fiscal year ending this month, rather than the 10 billion yen profit it had previously forecast. Sharp pushed back against an earlier, bigger cut of around 200 billion yen proposed by Foxconn, but was is in no position to walk away from the Taiwanese company as it was desperate to secure funds, they said.

Bloomberg notes:

It has been 26 days since Sharp’s board backed Foxconn’s bailout over a competing offer from Innovation Network Corp. of Japan. Since that time, Foxconn Chairman Terry Gou has held off on signing a final agreement with Sharp as his advisers examine the company’s finances. The Taiwanese company has sought to reduce the amount it’s supposed to pay Sharp’s banks and wants more clarity on Sharp’s performance in the current quarter, people familiar with the matter have said.