OSAKA/TOKYO -- Sharp on Thursday became Japan's first major electronics maker to be acquired by a foreign company.
In the morning, Sharp's board decided to accept a roughly 700 billion yen ($6.2 billion) takeover offer from Taiwan's Hon Hai Precision Industry.
The board of Hon Hai, better known as Foxconn, also is to meet on Thursday and officially decide on the acquisition.
The two companies will hold a press conference to announce details of what Foxconn intends to do with the Japanese corporate icon, known for its high-end liquid crystal display panels.
It appears, however, that Foxconn is to gain a majority of Sharp's shares through a new issue. It is also expected to send board members to Sharp. During negotiations, Foxconn Chairman Terry Gou was apparently keen on keeping Sharp's main businesses, except its solar panel division. As for layoffs, Gou has said no one 40 and under will be let go.
Part of the 700 billion yen will go toward the purchase of preferred shares owned by Sharp's lenders. Foxconn will also buy the assets of a joint venture it already has with Sharp, Sakai Display Products, an LCD factory in Osaka.
Gou is apparently betting that Sharp's mass-production technology for producing organic electroluminescence displays for smartphones and televisions will help Foxconn compete with South Korean electronics makers.
Foxconn and Sharp are already big suppliers to Apple, and the combined company expects to sell OEL panels to the Silicon Valley company. Apple is said to be planning to use the panels in upcoming iPhone iterations.
One plan is for Foxconn to combine Sharp's LCD division with Sakai Display Products.
Sharp had been choosing between Foxconn's takeover bid and support from the Innovation Network Corp. of Japan, a state-backed fund. The fund offered Sharp a 300 billion yen injection as well as a 200 billion yen credit line.
Initially, Sharp was looking to take the state-backed fund's money; its lenders, however, were against this plan, which would have called on them to throw Sharp a maximum 350 billion yen lifeline.
After Gou directly explained Foxconn's enhanced offer to Sharp's executives at the end of January, Sharp began leaning Hon Hai's way. The two companies on Feb. 5 agreed to finalize a deal by the end of this month.
Sharp recorded a net deficit of more than 220 billion yen in the year through March 2015 as its LCD business slumped. Its struggles have continued into this business year.
Hon Hai's stock price temporarily rose 4.58% to 80 New Taiwan dollars after news of the agreement broke. The market's positive reaction shows the importance corporate Taiwan places on the acquisition of a big Japanese electronics maker.