The simmering distrust between Foxconn and Sharp was brought close to boiling point by the late hitch to Foxconn's takeover of Japan's struggling Sharp Corp, said people with direct knowledge of the matter.
Ever since Foxconn founder and billionaire Terry Gou pulled out of a planned capital tie-up and strategic partnership with Sharp in 2012, the two companies have eyed each other warily.
Tensions were ratcheted and upset Gou and caused embarrassment at Sharp after missteps in communication last week, when Sharp's board met and announced a decision to sell a two-thirds stake to the Taiwanese group.
Since it had just received "new material information" from Sharp that it hadn't seen before and needed to clarify, Foxconn had asked Sharp to delay voting on a deal on the eve of that board meeting.
"It seemed Sharp simply ignored Foxconn," said one individual familiar with Foxconn's take on the matter.
Around 300 billion yen ($2.66 billion) in contingent liabilities at Sharp was listed in the information. Sources said that in order to present a goodwill gesture to Foxconn to make the buyer aware of worst-case scenario risks, the list that was pulled together by working level officials at Sharp and forwarded to Foxconn without top officials seeing. They were not liabilities that required formal disclosure.
It didn't go down well on the Taiwan side.
"They felt violated," said a person briefed on the issue. Another source said Gou shouted at his team for not having discovered these liabilities in the first place.
The two companies' CEOs met in China to clear the air late Friday and the mood had calmed. Reflecting the importance of a deal, estimated to be worth nearly $6 billion, to both sides, Sharp and Foxconn have now agreed to extend a deadline for the takeover talks by a week or two.
While Foxconn, formally known as Hon Hai Precision Industry Co, would get control of technology it needs to strengthen its hand with major client Apple Inc, Sharp would have a much-needed financial lifeline.
A lingering ill-will between the two companies from an incident four years ago were revived by the hitched. At that time Foxconn had walked away from a deal following a warning of loss from Sharp after the Taiwanese chip maker had agreed to take a stake in Sharp at 550 yen a share as part of a broader partnership.
Sharp shares sank 74 percent over the next seven months.
Gou has been credited by some at Sharp with improving operations there after he personally bought a stake in Sharp's LCD TV panel plant in Osaka.
Gou wowed Sharp's board, independent directors and creditors with his presentation of a takeover plan on January 30 and that was the turning point in the latest deal.
"Terry's a very convincing guy ... I've seen him use his magic," said a person familiar with how Gou operates.
"Sharp's blueprint, Terry is very clear about it and knows this stuff like the back of his hand," another person familiar with Gou said.
(Source:www.reuters.com)
Ever since Foxconn founder and billionaire Terry Gou pulled out of a planned capital tie-up and strategic partnership with Sharp in 2012, the two companies have eyed each other warily.
Tensions were ratcheted and upset Gou and caused embarrassment at Sharp after missteps in communication last week, when Sharp's board met and announced a decision to sell a two-thirds stake to the Taiwanese group.
Since it had just received "new material information" from Sharp that it hadn't seen before and needed to clarify, Foxconn had asked Sharp to delay voting on a deal on the eve of that board meeting.
"It seemed Sharp simply ignored Foxconn," said one individual familiar with Foxconn's take on the matter.
Around 300 billion yen ($2.66 billion) in contingent liabilities at Sharp was listed in the information. Sources said that in order to present a goodwill gesture to Foxconn to make the buyer aware of worst-case scenario risks, the list that was pulled together by working level officials at Sharp and forwarded to Foxconn without top officials seeing. They were not liabilities that required formal disclosure.
It didn't go down well on the Taiwan side.
"They felt violated," said a person briefed on the issue. Another source said Gou shouted at his team for not having discovered these liabilities in the first place.
The two companies' CEOs met in China to clear the air late Friday and the mood had calmed. Reflecting the importance of a deal, estimated to be worth nearly $6 billion, to both sides, Sharp and Foxconn have now agreed to extend a deadline for the takeover talks by a week or two.
While Foxconn, formally known as Hon Hai Precision Industry Co, would get control of technology it needs to strengthen its hand with major client Apple Inc, Sharp would have a much-needed financial lifeline.
A lingering ill-will between the two companies from an incident four years ago were revived by the hitched. At that time Foxconn had walked away from a deal following a warning of loss from Sharp after the Taiwanese chip maker had agreed to take a stake in Sharp at 550 yen a share as part of a broader partnership.
Sharp shares sank 74 percent over the next seven months.
Gou has been credited by some at Sharp with improving operations there after he personally bought a stake in Sharp's LCD TV panel plant in Osaka.
Gou wowed Sharp's board, independent directors and creditors with his presentation of a takeover plan on January 30 and that was the turning point in the latest deal.
"Terry's a very convincing guy ... I've seen him use his magic," said a person familiar with how Gou operates.
"Sharp's blueprint, Terry is very clear about it and knows this stuff like the back of his hand," another person familiar with Gou said.
(Source:www.reuters.com)
