The Taiwanese corporation that assembles most of iPhones in the world, Foxconn, has offered $5.3 billion to acquire troubled Japanese electronics manufacturer Sharp Corp.
Sharp, which has been bailed out several times by banks, is preparing to review a competing offer from Innovation Network Corporation of Japan, a governmental investment fund.
Those familiar with the issue said that the fund was weighing a bid of approximately 300 billion yen as reported earlier by the Nikkei newspaper, according to China Technology News. It was unclear whether the INCJ bid would need concessions from main creditors of Sharp.
Officials from Japan are concerned about Sharp ending up under foreign control, citing the company's technology in display panels. INCJ already has a majority share in Japan Display Inc., another key display maker. Reportedly, the two Japanese panel makers share expertise in next-generation panel technology and mass production.
According to The Wall Street Journal, industry minister Motoo Hayashi said, "Japan's technology is leading the rest of the world and we would like to help make it even more competitive."
While INCJ is preferable because it will keep Sharp under Japanese control, Foxconn is offering a better deal and it is ready to shoulder all debts of the company. Such conditions serve as an incentive for Sharp's creditors to make a decision based on the economics of the deal, as opposed to political considerations.
Standard & Poor's revealed that Sharp has a March due date to repay a sum of 510 billion yen in borrowings. Sharp has said that its main creditors are Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. The company owes these two banks between 500 billion yen and 600 billion yen.
The Taiwanese company does not intend to replace Sharp's top management, a move meant to reassure Japanese officials worried about a foreign takeover. Reports indicate that Sharp and its creditors hope to make a decision by Feb. 4, when Sharp is slated to announce its latest quarterly results.
However, there is no official statement from Foxconn, Sharp and INCJ representatives.