The Sharp Foxconn deal is go - here's four things you need to know about two major Apple iPhone suppliers uniting

 
Lynsey Barber
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Sharp and Foxconn both work with Apple (Source: Getty)

The Foxconn Sharp deal has been as on-again off-again as Elon Musk's marriage - but the deed is finally done after much back and forth, finally uniting two of Apple's major suppliers.

1. The deal

Hon Hai Precision, or Foxconn as it's more widely known, will pay 389bn yen (£2.4bn) for a 66 per cent stake in Sharp.

That amount is lower than an original offer it made in February of just over £3bn, but it put that on hold after receiving "new information" on some of its liabilities in its due diligence process.

Now, Foxconn will buy shares at 88 yen per share, 35 per cent less than their value at close of markets on Wednesday.

Back in 2012, the two originally agreed a deal, but that fell through when Sharp first reported a surprise fall in its forecast profits.

2. Why it's a big deal

Poor old Japan. Once the pinnacle of tech innovation, producing electronic inventions such as the walkman, CD player, karaoke, the pocket calculator, Blu Ray and VHS, to mention just a few, Sharp and its cohort such as Sony, Panasonic and Toshiba are now running into trouble

The dominance of Japan's electronics firms has waned as competition emerges from elsewhere and the deal is the first ever foreign takeover of a major Japanese electronics company.

3. Why it makes sense

Foxconn is known as the major supplier of components for and assembler of Apple's iPhone and iPad. Sharp's display technology, which Apple also uses, will be a valuable addition to Foxconn's Apple-focused business.

4. What now?

At the same time as the deal was confirmed, Sharp revealed it now expects to post a 170bn loss for the year, adjusted from a previous forecast of a 10bn yen profit.

Foxconn however, clearly still sees an opportunity to bolster its position with Apple from its screen tech, despite those losses.

“On the one hand, you can see why Foxconn is trying to do it," Harvard Business School professor Willy Shih told the New York Times. "It’s not clear the economics make sense, but it’s that they need to control more and more of the supply chain”.

Rumours have long circulated that Apple is working on an OLED screen for iPhones (they are currently LCD), but LG and Samsung would also be vying for that production contract.

A shake up of management could also now be on the cards at Sharp under the new regime.

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