The future of "Hong Xia Lian" is not going to Sharp or launching a new round of cost reduction plan

The shareholding agreement between Sharp and Hon Hai has been unresolved for a long time. At the bottom line of the “Greater Shareholding Ratio of Hon Hai” and “Hon Hai will not send a director to Sharp”, the chairman of Sharp Greater China, Mr. Kanno, has a new idea, and there is news that Guo Taiming has a new idea. He has obtained the position of deputy director of the Sharp LCD 10th generation line factory. However, the two sides still have not disclosed the final plan. Instead, Sharp will launch a new round of large-scale cost reduction plan.

Guo Taiming does not satisfy pure capital investment
In the initial agreement between the two parties, 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 Sharp's total price at 550 yen/share. The company received a 9.9% stake in Sharp's head office.

However, this combination, which is regarded as a heavy industry in the near future, is challenged by Sharp’s stock price. The 10% stake held by Hon Hai has shrunk by as much as 70%, and directly dragged Hon Hai’s own stock price. Although Sharp's share price has rebounded after the two sides explicitly re-negotiated, the closing price of 205 yen last week is still very different from the share price of Hon Hai's 550 yen (about 7 US dollars / share).

And the consultation process is not going well. Earlier, it was reported that the two sides will issue a joint statement on Friday (September 7), but the outside world’s speculation has failed. According to the latest news, Guo Taiming has been impatient with this "marathon"-style negotiation. Some media quoted Guo Taiming's voice. "I will say it again! We will not accept our request. You should consider it quickly!"

It is understood that Guo Taiming demanded that "the core is to intervene in Sharp's operations." When he recently accepted an exclusive interview with local media in Taiwan, he clearly pointed out that the essence of the problem with Sharp is that Hon Hai will not only invest in capital alone. To intervene in business is to hope that both sides can succeed.

New round of cost reduction plan started
However, Sharp is not willing to let Hon Hai intervene in business. Sharp’s chairman of the Greater China Region, Mr. Kanno, revealed at the end of last month that President Sharp Okoda had repeatedly negotiated with the team of Chairman of the Hon Hai Group, Guo Taiming, but there were two changes, that is, “Hanhai’s 9.9% share is not Will improve, Hon Hai will not send a director to Sharp."

Guo Taiming’s tough stance makes the outside world wonder if Sharp will compromise on the above two “bottom lines”. Sharp did not respond on September 9, saying that there is still no up-to-date information available for disclosure. However, sources pointed out that Okuda Takashi may go to Taiwan this week to start negotiations with Guo Taiming again.

On the one hand, Sharp released "in order to achieve the cooperation between Hon Hai and Sharp, and is willing to accept Hon Hai's reinvestment in the stock with the recent average share price." On the other hand, Sharp is also "making the worst plan." According to the latest news, Sharp did not take Hon Hai’s contribution into consideration in the newly proposed reorganization plan in order to accept financial institution financing requirements. That is to say, if Hon Hai and Sharp can't reach an agreement, Sharp has his own plans.

And after rumors of cutting 5,000 jobs after 62 years, Sharp may also significantly reduce the year-end bonus for employees, which is the latest wave of business cost reduction plans.

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