Foxconn to Overcome Hurdles in Toshiba Stake Purchase via Sharp

hon hai precision
Photo from Foxconn website

Apple iPhone assembler Foxconn, trading as Hon Hai Precision Industry Co., Ltd., continues to seek a stake in Japan-based Toshiba’s memory business, which the company has sought to sell since early this year.

To overcome Japan’s protectionist economic policies, Foxconn plans to make a bid for the Toshiba unit via its Japanese subsidiary Sharp, which it purchased for US$3.8 billion in August 2016. The Japanese government is concerned that selling the unit to a foreign company would lead to technology secrets flowing to competitors.

Sharp is seeking to acquire a 10-20% stake in the memory unit, according to Nikkei Asian Review. Foxconn is also reportedly looking at making a joint deal with US-based companies such as Apple. Foxconn believes that a successful bid will help it open a chip plant in the US.

The first round of bidding for the unit ended in March and Toshiba is considering pushing back the deadline for the second round. Other companies involved in the potential deal include US-based private equity fund Kohlberg Kravis Roberts (KKR), South Korea-based SK Hynix, and US-based Broadcom.

Any deal could be complicated as Western Digital has filed to block any sale of the chip unit without its consent. Western Digital jointly operates Toshiba’s chip unit, but the US-based company is not considered a favored bidder for the business, according to CNBC.

Toshiba hopes to raise capital to continue operating its other business units. Its unaudited earnings revealed that the company ended the year with a net loss of 950 billion yen ($8.4 billion).

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