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Sharp climbs after Foxconn signs rescue deal, pays first deposit
[TOKYO] Sharp Corp shares rose after President Kozo Takahashi and Foxconn Technology Group's Chairman Terry Gou formally signed a rescue deal over the weekend that gives the electronics maker a chance to recover from a long slump.
The stock climbed as much as 6.4 per cent to 133 yen in early Tokyo trading on Monday, while the Nikkei 225 Index was mostly unchanged.
The parent of Hon Hai Precision Industry Co transferred 100 billion yen (S$1.21 billion) to Sharp on March 31, the first part of a cash infusion that would give it a controlling stake in the Japanese company.
The deal's consummation ended weeks of drama, when the acquisition repeatedly looked like it could fall apart.
Mr Gou had appeared on the verge of grasping his prize at the end of February, when Sharp's board chose Foxconn over a rival bid from the state-backed Innovation Network Corp of Japan.
But after learning about liabilities at Sharp, Mr Gou pushed back the final agreement and negotiated a new, reduced deal to pay 389 billion yen for 66 per cent of Sharp.
The cash infusion couldn't have come soon enough. Sharp said on Wednesday it expects an operating loss of 170 billion yen for the fiscal year ended March 31, reversing an earlier forecast for a profit.
The company is also set to report a net loss for the just-ended fiscal year, bringing total losses over the past five years to more than US$10 billion.