Sharp Takeover Influenced by Potential Apple Orders

Earlier this week the Wall Street Journal reported that Apple supplier Foxconn had placed an attractive bid for the struggling iPhone display manufacturer Sharp. At first glance the $5.3 billion seems attractive enough, especially if we consider that Sharp has to repay about $4.3 billion to its creditors in March, but there are other factors owners and creditors will consider when reaching a decision. And Apple’s orders are one of those factors (via the WSJ).

Foxconn, which flashed the cash, is a top Apple supplier, but a Foxconn acquisition would mean Sharp would enter under foreign control. Sharp has received another offer, which isn’t that shiny, but it comes from Innovation Network Corp. of Japan (INCJ).

While investors may be interested in cashing in their preferred shares early – Foxconn’s offer would allow it – there are other factors the decision-makers will consider when comparing the offers.

One of these is that Japanese government officials would prefer the state-backed fund INCJ to take over Sharp. The move makes sense if we consider that Apple supplier Japan Display was set up by INCJ in 2012 as Hitachi, Toshiba, and Sony combined their display manufacturing forces. Now, the most likely scenario would be Sharp joining Japan Display and forming a viable player against South Korean and Taiwanese competitors for Apple display orders.

The final decision belongs to team Japan, and according to the WSJ, they seem unimpressed by the potential of the Foxconn takeover.