Foxconn, Sharp "on the Right Track" in Deal Talks

By Reuters
March 07,2016
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Sharp Corp Chief Executive Kozo Takahashi (C) is surrounded by media as he leaves the company's Tokyo headquarters in Tokyo, Japan, February 25, 2016, after reports of Sharp Corp agreeing to a takeover by Taiwan's Foxconn. REUTERS/Yuya Shino

TAIPEI/TOKYO (Reuters) - Talks for Taiwan's Foxconn to acquire a majority stake in Japan's Sharp Corp are "on the right track", people familiar with the matter said on Monday, after a last-minute hitch over contingent liabilities caused delays last month.

Discussions are set to conclude this week, one person said, adding that most of the due diligence is done.

Foxconn late last month suspended the signing of a deal to take over the loss-making Japanese electronics firm, citing the emergence of new material information. The announcement came after Sharp's board voted in favour of Foxconn's offer, estimated at nearly $6 billion.

Sharp shares were 6% higher in afternoon trade.

Terry Gou, chief executive of Foxconn, is in Bangkok to participate in a business expansion meeting sponsored by Sharp, the Taiwanese firm, formally known as Hon Hai Precision Industry Co, said on Monday, adding that he was invited to attend by Sharp.

His attendance signals Gou has begun to participate in Sharp's activities, said a separate source familiar with Foxconn's thinking.

"It is not important when an official signing will take place, but that Gou, who thinks 2-3 steps ahead of everyone, is already going into action by being in Thailand today," the person said.

Sources declined to be identified as they were not authorised to talk to the media. Sharp and Foxconn declined to comment on Monday on the state of progress of the discussions.

Foxconn said in a statement on the weekend that there was no firm date to sign a deal with Sharp as both sides continued to make progress towards an agreement.

The hitch to Foxconn's takeover of Japan's struggling Sharp centered on information that listed around 300 billion yen ($2.7 billion) in contingent liabilities at Sharp, sources have previously said. These were worst-case scenario risks that might happen in the future, but not liabilities that required formal disclosure, they added.

(Reporting by J.R. Wu and Makiko Yamazaki; Editing by Edwina Gibbs)