Sharp shares fall on confusion over Hon Hai deal.
Sharp shares tumbled Wednesday morning after the Japanese electronics giant and Taiwan's Hon Hai Precision appeared to offer contradictory views on the state of an expected investment deal. Sharp said Tuesday the deadline for a capital injection from Hon Hai had lapsed without any pact, adding that it would seek out other funding sources to help repair its hard-hit balance sheet. Hours later, Hon Hai, which makes Apple gadgets in China, denied the deal was off, saying the proposed agreement did not expire until March 2015, a two years later than the deadline offered by Sharp. Under the proposed tie-up Sharp was to sell 121 million new shares -- about 550 yen apiece -- worth 66.9 billion yen ($710 million), while Hon Hai would also take half of the Japanese firm's 93.0 percent interest in a huge liquid crystal display plant in western Japan. But the deal stalled as Sharp's share price nosedived after it released a dire earnings report. In Tokyo morning trade the firm fell more than four percent in Wednesday morning Tokyo trade, closing the morning session down 3.79 percent at 279 yen. A Sharp spokesman said Wednesday: "We can't comment on details of the contract, although we are aware of Hon Hai's statement last night." Late Tuesday, Hon Hai's version of events was that "according to the pact signed on March 27, 2012, the agreement is effective for three years and will not expire until March 26, 2015". Cash-strapped Sharp has been seeking capital tie-ups as it looks to rebalance its finances. Earlier this month it agreed a $111 million injection from South Korean giant Samsung, while it is also hammering out the details of an agreement with US chipmaker Qualcomm. Sharp's statement on Tuesday said the pact with Hon Hai had faltered because it could not win approval from "relevant authorities". Last year Taiwanese regulators returned Hon Hai's application over the deal, asking for more information about the pact and saying they feared the sale price was too high. On Wednesday, Japan's leading Nikkei business daily quoted Taiwan's Ministry of Economic Affairs as saying that it had requested additional information from Hon Hai. "But we never heard back," the Nikkei quoted the ministry as saying. "We have never formally denied approval for the deal." A Hon Hai spokesman was not immediately available to comment Wednesday while Taiwan's Investment Commission, which is part of the ministry said that regulators were still reviewing the agreement.Hon Hai shares were up 0.6 percent at Tw$84.0 in morning trade.
Muscat Press and Publishing House SAOC 2013
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|Publication:||Times of Oman (Muscat, Oman)|
|Date:||Mar 27, 2013|
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