The struggling century-old company chose Apple supplier Foxconn over a state-backed investment fund during a two-day board meeting.
The announcement sent shares in Sharp plunging as much as 21.8 per cent amid dilution concerns.
Under the deal, Sharp plans to raise 484 billion yen (4.3 billion dollars) by issuing shares to Foxconn, also known Hon Hai Precision Industry. The deal would enable the Taiwanese firm to gain a controlling stake of 66 per cent.
Foxconn will also spend 100 billion yen to purchase Sharp’s preferred shares held by its creditor banks.
Foxconn is expected to take advantage of Sharp’s technology to develop next-generation organic light-emitting diode displays, diversifying its portfolios.
The Innovation Network Corporation of Japan had planned to invest 300 billion yen in Sharp and set a 200-billion-yen credit line while asking its lenders for additional financial support.
Japanese Industry Minister Motoo Hayashi acknowledged that INCJ lost the takeover bid, and expressed hope that Foxconn will help secure jobs at Sharp and reinvigorate local economies in Japan.
Sharp, founded in 1912, has about 44,000 employees in Japan and abroad.
“We hope Sharp will grow,” Hayashi said.
In May, Sharp received 225 billion yen in financial support from its main creditors after it reported a third annual net loss in four years due to slumping sales of TV and liquid-crystal displays amid competition with Chinese and South Korean rivals.
Sharp decided to cut thousands of jobs and sell its head office building in Osaka for its turnaround efforts.
Source: GNA
