The China Post news staff
TAIPEI, Taiwan — Hon Hai Precision Industry Co., the world’s largest contract electronics maker, said yesterday that its cooperation with Sharp will survive a missed deadline. According to a statement released by Hon Hai, the top management of both sides have agreed to continue cooperation after a five-hour meeting on March 24. The contract signed on March 27, 2012 is effective for another two years before it expires on March 26, 2015, Hon Hai said. Based on an agreement both sides reached on Aug. 3, 2012, Hon Hai will purchase a 9.9-percent stake in Sharp, with the shares sold at market price, the Taiwanese company pointed out. Hon Hai said it hopes to complete that deal in three months with the help of a capital injection.
The statement added further drama to an ongoing saga. In 2012, Sharp’s board of directors approved a business cooperation proposal by Hon Hai, which had sought to purchase about 10 percent of Sharp’s stock at 550 yen per share — a total investment of 66.9 billion yen. The share price of Sharp, however, declined dramatically since Hon Hai proposed this original plan. According to Hon Hai, both companies reached a consensus concerning a new approach to payment, which will see Hon Hai not purchase the stock at 550 yen per share but rather at the market price, which is substantially cheaper.
Hon Hai failed to make the payment deadline yesterday. This news prompted reports that the deal had collapsed. “It’s true that we have not received payment from Hon Hai and today is the deadline,” said Sharp’s spokeswoman Miyuki Nakayama yesterday. Hon Hai’s announcement came after Sharp said the pact had faltered as it could not acquire approval from “relevant authorities.” According to Taiwan’s Central News Agency, however, Sharp said they will continue their talks with Hon Hai. The Japanese electronics giant has incurred a loss of up to 450 billion yen as of last November.