Foxconn Technology Group said on Friday it will resubmit a required regulatory filing to buy a stake in Sharp, after Taiwan's government returned the previous application to the company, stating it failed to address the profitability of the investment.
Foxconn, one of the world's largest electronics manufacturers, said in March it would buy a 10 percent stake in the Japanese display maker for about US$850 million. But since the deal was announced, Sharp's stock price has fallen dramatically to less than half its value, with the Japanese firm's financial loses driven by price declines in display panels and competition with other manufacturers.
The stock price fall has left the return on Foxconn's investment in question, forcing Taiwan authorities to ask the company to resubmit its application to buy Sharp's stake, said Foxconn spokesman Simon Hsing.
Both Foxconn and Sharp, however, are working on a new deal, he added, which will be announced at the end of August or early September. "We will review, and re-evaluate how we should submit our application again,"
Taiwan's Ministry of Economic Affairs, said the return of the application was not a rejection of the deal, but a request to reapply with information on the investment's profitability, said Emile Chang, deputy executive secretary of the ministry's investment commission.
A Sharp spokeswoman said the two companies were working out aspects of the deal with Foxconn, including the financial details. "We have been discussing various issues between the companies. No finalized agreement is available. When something comes up we will certainly make an announcement," she said.
As part of the investment, both companies are forming a partnership to collaborate in various business fields to improve component production. The original deal would have given Foxconn half of the LCD panels manufactured at a key Sharp factory in Sakai, Japan, with both companies jointly running the facility.
The two companies are suppliers to Apple, with Foxconn rumored to be working on a new Apple-branded TV set. Sharp planned on using Foxconn's investment for the development on new technologies in order to remain competitive.