Sharp rebuilds, Domino reorganization plan collapses

Sharp will determine the reconstruction plan based on the investment plan of Taiwan's Hon Hai Precision Industry before the end of February. For the proposal of the government-industry-integrated fund, the Japanese industrial innovation agency, Sharp also said that it would "study" and the conclusion of reconstruction is still unclear. Sharp, who is "indecisive", reflects the lack of guidance and decision-making ability of President Takahashi Hiroshi.

When the outside world thought that Sharp would rebuild under the leadership of the government-industry-integrated fund, the Japanese industrial innovation institution, it suddenly emerged the reconstruction plan of Taiwan's Hon Hai precision industry. This is because at the end of January 2016, Hon Hai has developed conditions that are much better than the innovation institutions.

Hon Hai's total program assistance amounted to 700 billion yen. The vast majority of funds can be used for Sharp's main growth investment, and layoffs and management are not required to retire.

The reconstruction program of the innovation institution only contributed about 300 billion yen to the Sharp main body. The main trading bank Mizuho Bank and Mitsubishi Tokyo UFJ Bank also provided financial assistance totaling only 350 billion yen, and asked Sharp's management to make a big change. On this basis, it is also required that Sharp splits the liquid crystal business that led to the sluggish performance and integrates with the Japanese Display (JDI) under the Innovation Agency. The white goods business will also merge with Toshiba, which is also in the doldrums, to launch the "electronic industry domino restructuring."

The reconstruction program of the innovation institution is reminiscent of "Sharp disintegration." The Hon Hai program not only has a huge amount of assistance, but also has good conditions for major shareholders such as trading banks. If abandoned, shareholders will inevitably be held accountable for Sharp's "violation of the company's obligations to properly manage the company", and management has changed its mind.

At the financial report conference on February 4. Sharp President Takahashi Hiroshi said: "Invest more resources for consideration (Hon Hai Program)." At this point, the implementation of reconstruction in Hon Hai has gradually become the main line.




A cadre of the Ministry of Economy, Trade and Industry, which is considered to be in control of innovation institutions and "draw a blueprint for the domino restructuring of the electronics industry", also acknowledged that "Hon Hai has an advantage of 6 to 70%." Although some people are worried that "(technical) may be lost overseas" and "to form a Japanese pill alliance", the cadre said, "It is not necessary to rely on Japanese companies, nor all Japanese technologies must be protected. Restructuring needs It has the understanding of the Japanese people, but it must also be strictly examined overseas. Ultimately, it will be decided by the management of Sharp."

The main character of the drama, Sharp, is still hesitant, "nothing to play."


"Innovative Agency Program" still has charm

After Takahashi President acknowledged "Hon Hai's lead" at the February 4th press conference, Chairman of the Board of Directors of Hon Hai, Mr. Guo Taiming rushed to Osaka, where Sharp's headquarters is located. On the morning of February 5, Guo Taiming said, "I hope to sign at 2 pm", and held talks with President Takahashi and others at Sharp Headquarters. From here, we can see the temperature difference between Guo Taiming and Sharp.

In the evening, Guo Taiming, who was out of Sharp's headquarters, said that he had "signed the right to negotiate first" and showed the agreement to the media. However, the content only indicates that "the negotiation on the acquisition plan will last until February 29." However, within an hour, Sharp announced that "there is no (giving priority to negotiate)", denying Guo Taiming's speech.

Regarding the signing of the contract with Hon Hai, Sharp’s attitude is very cautious. "Because in 2012, Hon Hai did not honor the investment agreement reached between the two parties, so Sharp does not fully trust Hon Hai" (relationship). Moreover, some of Sharp's directors also dismissed the misunderstanding of "receiving the scheme of the innovation institution, and Sharp will be dismembered", thus turning to caution.

On February 2nd, the "article" submitted by the innovation agency to Sharp secretly resolved the misunderstanding. "Sharp will not be dismembered, but will focus on Sharp, and assemble the home appliance business of each company to create an IoT (Internet of Things) company that represents Japan in the future." The cadre of the innovation agency said, "We did not intend to split the business outside the LCD, but because of media reports and other misunderstandings, it was clarified."

Moreover, in order to counter the plan proposed by Hon Hai on January 30, the innovation institutions also set new conditions for financial assistance. The article stated that "the LCD business has a maximum loan amount of 200 billion yen," and said that "300 billion yen can be fully used for growth business investment."

Investing 300 billion yen in the Sharp main body and 200 billion yen in the LCD business, together with the 150 billion yen that can be obtained from the "SDP" LCD subsidiary of Hon Hai's joint venture, and the transaction bank finance. Approximately 350 billion yen in aid. The article even stated that these funds are added together. "Financial assistance will reach 1 trillion yen, far exceeding the 600 billion yen (at the time) of Hon Hai reported by the media."




For Sharp, which believes that "liquid crystal is the source of all evils" and wants to focus on other businesses, the article submitted by the innovation agency secretly appears "not bad" (Sharp people). At the press conference on February 4th, President Takahashi stated that "it will be divided into LCD and other two major businesses", emphasizing the ambition to split LCD.

The article of the Innovative Institution also wrote intimately: "(The choice of a reform agency) is also beneficial to (Sharp's) shareholders, shareholders will not litigate the directors did not do their duty to properly manage."

It is precisely because of this kind of psychology that Sharp’s scheme is not inferior to Hon Hai’s scheme. Sharp has not been able to make a decision. The executives of the innovation agency whispered:

"Because Guo Taiming publicly said that 'the right to prioritize the signing' and that it is necessary to cut down the employees over the age of 40, Sharp feels that 'Hong Haiguo can't believe it'. Now it is not necessarily the one who will die."

At the financial report conference on February 8th, JDI's local president said: "(Sharp's LCD business) if it can be a 'good thing'." JDI executives also said that "(innovation agency) has not given up" It is not clear that the final attribution of the Sharp reconstruction case is still unclear.

Takahashi, who received the autumn wave, actually teased

At the press conference, President Takahashi actually joked: "There is no intention to sit on the ground (raising the conditions)." It was already a "board fish" that was arbitrarily slaughtered. It was even easier to do so. The reason behind it was that the two companies were still sending "Autumn Wave". But the innovation agency still asked the management to change blood in the February 2 article. Banks also prefer the Hon Hai program that does not cause pain. The advantages of Hon Hai have not changed.

The reconstruction policy is expected to be finalized on February 29. If the Hon Hai case wins, there will be no reorganization of the dominoes in the electronics industry. The program of the innovation agency has also increased the strong color of Sharp reproduction, and there will be no dismemberment in the original rumor. Regardless of the outcome, the "Domino Reorganization" growth strategy described by the Ministry of Economy, Trade and Industry of Japan will be ruined.