TAIPEI -- After months of speculation and at least one unraveled deal, Foxconn will acquire a 66% share of Sharp for 389 billion yen ($3.4 billion), the companies said today.
With the acquisition, Foxconn becomes not only the world's largest EMS/ODM, but now a prominent OEM in its own right.
The terms are significantly lower than the originally accepted big of $6.3 billion. That offer came before -- presumably -- Foxconn became of aware of hundreds of millions of off-the-books obligations by the struggling Japanese electronics maker.
Under the new agreement, Foxconn get its prize at both a reduced price and with more favorable terms, including a three-year delay in buying 100 billion yen ($887.7 million) worth of preferred Sharp shares from a pair of Japanese banks.
The winning bid was withing range of a competing offer from Innovation Network Corp. of Japan, a state-backed fund whose proposal was rejected by Sharp's board in February. INCJ’s proposal included 300 billion yen in cash investments plus another 350 billion yen in new lender support.
Sharp needed the bailout immediately; payments due to creditors at month's end might have otherwise pushed the firm into bankruptcy.
Will the Foxconn-Sharp deal portend more EMS/OEM marriages? See Mike Buetow's commentary.