Sharp shares soar in Tokyo after report Hon Hai may raise offer

A man walking past a display showing a Sharp logo in Tokyo.
A man walking past a display showing a Sharp logo in Tokyo. PHOTO: REUTERS

TOKYO (bloomberg) - Shares of Sharp Corp jumped by the most in more than a month in Tokyo trading after the Yomiuri newspaper reported Hon Hai Precision Industry Co may raise its offer for the Japanese iPhone-supplier by 40 per cent to 700 billion yen (S$8.55 billion).

The shares climbed as much as 23 per cent, the most since Nov.24 on an intraday basis. Trading volume was more than triple the three-month full-day average.

Sharp is considering selling a stake in its LCD operation to government-backed Innovation Network Corp of Japan or to Hon Hai, a unit of Taiwan's Foxconn Technology Group that assembles Apple's iPhone, people with knowledge of discussions within the companies have said. Sharp, which makes displays for mobile phones, tablets and televisions, remains dependent on its main lenders for survival.

"Hon Hai wants to get Sharp's liquid-crystal display technology," said Yasuaki Kogure, chief investment officer at SBI Asset Management Co. He said INCJ may raise its offer for Sharp in response to Hon Hai's move.

Sharp has vowed to revamp its liquid-crystal display business and acknowledged talks with other companies, after booking more than 1.2 trillion yen in losses over the past four financial years as lower-cost South Korean and Chinese rivals undercut its core TV business.

Hon Hai, which makes smartphones, videogame consoles and personal computers on a contract basis, said in September it signed a letter of intent to buy a stake in Sharp and was negotiating a price and conducting due diligence, people familiar with the plan said at the time.

Hon Hai is Foxconn's largest unit and the world's biggest maker of iPhones, getting about half its revenue from Apple. Chairman Terry Gou is seeking to expand beyond assembly to offer components, including displays and semiconductors.

The Hon Hai offer signed in September would give Foxconn management control as the Japanese electronics maker spins off its liquid-crystal display business, according to the people familiar with the plan. Foxconn had wanted to model the deal on Mr Gou's personal investment in Sharp's Sakai Display operations in 2012, which gave the Taipei-based company management control over the LCD factory, one of the people familiar said.

Sharp first agreed to sell a stake to Hon Hai in 2012, yet talks foundered over disagreements on price and Foxconn's prospective role in management. Mr Gou later said he'd been "fooled" in discussions and both sides decreased exchanges.