Sharp: Sticking to Hon Hai's 9.9% bottom line does not enter its board of directors

Last week, Hon Hai’s boss, Guo Taiming, went to Japan to visit the “堺 factory” of Sharp’s tenth generation line, but missed the press conference on the day. It was speculated that Guo Taiming’s plan to lower Sharp’s share price was lost. It is reported that Sharp President Okuda Takashi intends to visit Guo Taiming in Taiwan in September and said that as long as the two sides talk well, there will be results.

In March of this year, Japan’s “100-year-old shop” Sharp and the global foundry giant China’s Taiwan’s Hon Hai formed a “good for Qin and Jin”. Hon Hai will invest 66 billion yen in the shares of Sharp's factory in San Francisco, 37.61%, and acquire half of the production capacity of the 10th generation line. At the same time, it will invest about 66.9 billion yen in the price of 550 yen per share to participate in the Sharp Head Office and get Sharp Corporation 9.9. % equity.

In July, Hon Hai invested 66 billion yen in the Sharp 10th generation line and has already begun to participate in the operation of the 10th generation line. However, due to Sharp's first-quarter fiscal year (April-June), the company's performance was lower than expected, the stock price fell more than half, only about 200 yen / share, Hon Hai proposed to re-share the price, hoping to get Sharp more at a lower share price More shares, even into the Sharp board of directors.

The intention of "Guo Huichang" (Guo Taiming) is obvious. He only has Sharp's panel resources and can't satisfy his "appetite." He wants to take advantage of Sharp's high-end LCD panel production technology. After all, Sharp has the only one in the world. Generation line.

However, Sharp, which has always been conservative, has already spoken: Keeping Hon Hai's 9.9% bottom line, Hon Hai does not enter Sharp's board of directors.

According to the Japanese company law, 10% of the shares of the funder have the right to apply to the court to dissolve the company, and have strong authority over business participation. For the conservative Sharp, it is not willing to let Hong Kong of Taiwan, China, be strongly involved in Sharp's operations.

This year, "China Electronics" intends to provide technical support to Sharp in the industry on the tenth generation line in Nanjing. The chairman of Sharp Greater China, Mr. Kanno, has denied it. He also denied pressure from Hon Hai. At that time, he said that the core technology of Sharp's tenth generation line does not belong to the factory, but belongs to the Sharp Head Office, and Hon Hai shares in the Sharp Head Office 9.9% will not send a director.

Obviously, what Sharp wants is the money of Hon Hai and the way of low-cost production, but he does not want Hon Hai to "intervene in the internal affairs", and he does not want the "home" outflow of core technology.

However, in the face of Hon Hai's high-profile price reduction requirements, Sharp did not want to tie the relationship between the two sides. Because of the loss of about 11.1 billion yuan in the first quarter, Sharp faced a lot of financial pressure. The cooperation with Hon Hai is one of the important conditions for Sharp to obtain bank support.

As the rating decreases, it becomes difficult for Sharp to directly finance through bond issuance. It has proposed the latest financial restructuring plan: one is the financial improvement of a total of 400 billion yen, the second is the stable operation of the factory, the third is the improvement of the income of small and medium-sized LCD, and the fourth is to reduce the fixed cost of 100 billion yen, including layoffs. 5,000 people.

Moreover, the cooperation between Sharp and Hon Hai has achieved initial results. The capacity utilization rate of the “堺 factory” has been significantly improved. Sharp said that large LCD panels began accepting orders from Hon Hai. “In the first quarter (refer to April to June), the operating rate is about 30%. In July, the operating rate of the factory has reached 80%, and in the second quarter (referring to July to September), the average operating rate is about 80% to 90%.”

And Guo Taiming is not willing to cooperate with Sharp and eventually "yellow". Zhang Bing, research director of Display Search China, believes that holding high-end panel resources is an important guarantee for Hon Hai to obtain production orders from first-line brands such as Apple and Sony. For example, Hon Hai wants to get an order for a 60-70-inch large-screen LCD TV. Sharp's panel is a trump card.

Sharp's solution is more focused on cooperation with Hon Hai to achieve performance improvement, stock price improvement, and maintain the original shareholding plan. Therefore, in addition to the ten-generation line, smart phones and Hon Hai cooperation, Sharp will also seek cooperation with Hon Hai in the small and medium-sized LCD panel and white goods business.

And Hon Hai’s desire to increase his shareholding in Sharp’s board of directors is frustrated, and it is estimated that he will get more “gifts” in the process of acquiring Sharp. There are rumors in the industry that Sharp will transfer the two color TV assembly plants in China and Mexico to Hon Hai. However, Sharp will not "step back too big."

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