Foxconn Chief Executive Terry “The Zookeeper” Gou is in Osaka to meet executives of Japan’s Sharp.
The move comes a day after Sharp said it was focusing on the Taiwan firm’s takeover bid over a rival offer from a Japanese state-backed fund.
Foxconn wants to invest $5.6 billion in Sharp and Sharp’s board had voted 13-0 to negotiate with Foxconn instead of the state-backed Japanese fund, the Innovation Network Corp of Japan.
No one is saying anything until Gou addresses the media in a coming press conference.
A takeover by Foxconn, which assembles various electronics products such as smartphones and television sets for Apple, Sony Corp and many other major international companies, would vastly expand sales channels for Sharp’s liquid crystal display (LCD) panels.
While a generous Foxconn offer had been predicted, many investors in Japan were surprised to see an overseas firm gain the upper hand over a state fund.
The decision comes after months of uncertainty over the fate of the company, whose display panel business has continued to suffer massive losses despite two major bailouts by its banks in the last four years.
Foxconn wanted to get its foot in the door of the display business and offered $5.3 billion to buy the troubled Japanese outfit Sharp.
According to the Wall Street Journal said that while Sharp would be happy with the deal, Japanese officials are a little wary about it. It would mean that the Japanese outfit will come under foreign control along with its display technology.
Industry minister Motoo Hayashi said that “Japan’s technology is leading the rest of the world and we would like to help make it even more competitive.”
In fact it has been suggested that banks are currently reviewing a competing offer from Innovation Network, a Japanese-government backed investment fund.
Japan’s Sharp has seen a third of the value of its shares fall after telling the world it was considering a capital reduction and preferred share issuance.
Investors apparently did not realise how much trash the company was scraping from the gutter of despair after years of losses.
A person familiar with the matter said the electronics manufacturer is planning to slash its capital from more than $1 billion to just $830,000 as part of a drastic restructuring plan. Sharp has been hit hard by mounting competition from cheaper Asia rivals in core its core liquid crystal panel display business.
Sharp’s shares slumped to the point where the company had a total market value of $2.77 billion and would have gone further but for stock market rules that prevent such slides.
Sharp has been indicating that a move would precede a preferred share issuance to its main lenders.
Japanese media have suggested the capital reduction is aimed at easing its tax burden as the smaller capital base will allow Sharp to be classified as a small to medium-sized enterprise for tax purposes.
This morning Sharp said that nothing had been decided and it would probably confirm any cunning plan on Thursday.
That plan will include a $1.7 billion debt-for-equity swap from its main lenders including a return for a promise to cut 5,000 jobs and split off its ailing smartphone display unit.