Newspaper article China Post

Hon Hai Sharp Purchase Unlikely to Be Concluded in March, Claim Analysts

Newspaper article China Post

Hon Hai Sharp Purchase Unlikely to Be Concluded in March, Claim Analysts

Article excerpt

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TAIPEI, Taiwan -- Terry Gou ([...]), chairman of Hon Hai Precision Industry Co. ([...]), has collateralized 170 million company shares under his name in a bid to amass the capital needed to acquire Japanese electronics maker Sharp Corp., market analysts have speculated.

The move is an indication that the marriage of Hon Hai and Sharp is already definitive, some said, adding that the merger will be finalized as early as next week.

According to public data publicized by the Taiwan Stock Exchange, Gou put up over 170 million shares as pledged on Feb. 15. The stocks are worth NT$12.69 billion in total value, and based on conventional practice, banks will grant Gou a NT$7.6 billion loan, which is 60 percent of the collateral value. The stocks account for 8.6 percent of Gou's Hon Hai shares.

The business tycoon has made similar maneuvers in the past. He put up stocks to obtain some capital for a Sharp plant investment.

However, the NT$7.6 billion estimated to be raised will make up only 5 percent of Hon Hai's bailout money, which totals NT$150 billion. The company still needs to get the rest of money via other means.Deal to Be Inked after March: Bloomberg

The latest news arrived after the inking of the final deal had been postponed beyond market expectations.

With Hon Hai Precision Industry Co. ([...]) unable to draw a clear understanding of Sharp's financial performance in the year so far, the merger between the two companies may be further delayed, possibly beyond March, according to a Bloomberg report.

Hon Hai made no immediate comment on the news. According to an insider source, Hon Hai has requested for the Japanese company's accounting records for the first quarter.

The two companies agreed to a merger deal on Feb. 25. However, one day before the agreement was finalized, Sharp sent a material file to Hon Hai, causing the Taiwanese company to reconsider the deal.

The document shows "contingent liabilities" worth 350 billion yen previously undisclosed to Hon Hai. …

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