Shares of Hon Hai rally on purchase of stake in Sharp


CNA

TAIPEI — Shares of Hon Hai Precision Industry Co. staged a rally yesterday after the Hon Hai Group, the world’s largest contract electronics maker, announced it was buying a stake in Japan-based Sharp Corp., dealers said.

The rally in Hon Hai Precision shares reflected investor optimism that the acquisition would strengthen the company’s bottom line by helping it and other Hon Hai Group affiliates secure orders from Sharp, which is outsourcing its manufacturing, they said.

At the end of trade, Hon Hai Precision — the flagship company of the Hon Hai Group — closed up 4.63 percent to NT$113, with 100.95 million shares changing hands. Sharp and the Hon Hai Group announced Tuesday that the group will spend about 67 billion Japanese yen to acquire a roughly 10-percent stake in the Japanese company.

Under the agreement, Hon Hai Precision will hold a 4.06-percent stake, Foxconn Technology Co., Ltd. a 0.65-percent stake, Foxconn (Far East) Ltd. a 2.53-percent stake and Q-Run Holdings Ltd. a 2.64-percent stake in the Japanese electronics company.

The acquisition was expected to make the Hon Hai Group Sharp’s largest shareholder.

“The market generally has a positive view of the acquisition, with many investors embracing high hopes that units of the Hon Hai Group will be able to get more orders from Sharp, either in product assembly or in component supply,” Concord Securities analyst Kerry Huang said.