Sharp falls on Foxconn takeover

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TOKYO: Sharp shares tumbled Thursday on news its takeover by Taiwan’s Foxconn would go ahead at a sharply reduced price, as Tokyo stocks ended the morning session flat.

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The market enjoyed a strong start as it extended a global rally sparked by US Federal Reserve chief Janet Yellen’s suggestion that another rate hike would not happen any time soon.

But the gains fizzled by the break, with Sharp falling nearly three percent to 131 yen after news Wednesday that Taiwan’s Hon Hai Precision, better known as Foxconn, will take over the Japanese electronics maker for 389 billion yen ($3.5 billion).

The price tag was substantially less than the 489 billion yen Foxconn put on the table when the deal was first announced in February.

The takeover ran into trouble over claims Sharp had not disclosed certain liabilities.

At the break, the benchmark Nikkei 225 index was up 0.07 percent, or 11.08 points, at 16,890.04, while the broader Topix index of all first-section shares ticked up 0.06 points to 1,356.35.

Tatsushi Maeno, head of Japanese equities at Pinebridge Investments Japan, said there was little juice in the market as the first quarter ends.

“With the negative impact from a stronger yen and weaker dollar, Japanese shares can’t keep up with the global gains,” Maeno told Bloomberg News.

In other share trading, auto part maker Takata rose a day after losing nearly a fifth of its market value. On Wednesday the firm was rattled by a report that said its recall costs could soar as high as $24 billion owing to a global airbag crisis linked to at least 10 deaths. Its shares were up 5.79 percent at 438 yen by lunch.

Banking giant Mitsubishi UFJ bounced back from two days of losses to sit up 2.52 percent at 525.1 yen by the break.

Toshiba soared 6.57 percent to 220.6 yen after saying Wednesday that China’s Midea Group will buy a little more than 80 percent of the conglomerate’s home appliances arm for $473 million.

Toshiba, hammered by an embarrassing accounting scandal, is undergoing a wide-ranging restructuring that has included asset sales.

AFP

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