Taiwan's Foxconn has put its takeover of electronics maker Sharp on hold after discovering previously undisclosed liabilities, sources said. As Sonia Legg reports, it throws into doubt what was set to be the biggest takeover by a foreign firm in Japan's technology sector.
It started making mechanical pencils in 1912 but a century on Sharp's business needs more than a wash and brush up. Known now for making TV's, refrigerators and air purifiers it's had to accept a $5.8 billion bailout by Taiwan's Foxconn, now known as Hon Hai Precision Industry. It could be the biggest foreign takeover of a Japanese tech firm. Peter Dixon is from Commerzbank (SOUNDBITE) (English) COMMERZBANK, GLOBAL FINANCIAL ECONOMIST, PETER DIXON, SAYING: "It's an indication that many of the industries which propelled Japan forward are no longer at the cutting edge." The takeover battle between a state-funded Japanese stalwart and the Apple supplier has been going on for months. With much debate over whether Sharp should be left to the forces of global competition. (SOUNDBITE) (English) COMMERZBANK, GLOBAL FINANCIAL ECONOMIST, PETER DIXON, SAYING: "I think the government probably took the view that stepping in to save ailing industries was probably throwing good money after bad. It doesn't make sense to step in and try and save specific firms unless they are of national importance and Sharp no longer is." But hours after Sharp announced a price had been agreed doubts emerged. Foxconn has apparently discovered previously undisclosed liabilities. It's not clear if the takeover can be salvaged. But Foxconn is keen on Sharp's display technology, as it tries to compete with rivals like Samsung.