liabilities list covered worst-case scenarios: source
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[February 29, 2016]
TOKYO (Reuters) - Sharp Corp's
list of liabilities that prompted Taiwan's Foxconn to suspend signing a
takeover deal was an unverified study of worst-case scenario risks,
rather than liabilities requiring disclosure, a source briefed on the
The list, sent to Foxconn on Wednesday, included previously
undisclosed potential liabilities worth around 300 billion yen ($2.6
billion), prompting Foxconn founder and billionaire Terry Gou to
hold off signing the estimated $5.8 billion deal, separate sources
Reuters was unable to ascertain why the list was sent to Foxconn,
formally known as Hon Hai Precision Industry Co. Top Sharp officials
had not examined the list and had not planned to share it with
Foxconn, the source told Reuters on Saturday, declining to be
identified because of the sensitivity of the matter. The items
included unlikely events or risks, and the amount was far higher
than contingent liabilities that require disclosure, the source
added, without elaborating.
Sharp declined to comment. It said in a statement on Friday that it
has been properly disclosing its contingent liabilities, which stood
at around 80 billion yen as of end-2015.
Foxconn agreed with Sharp late on Friday to extend a deadline for
the takeover talks by one or two weeks beyond Monday's planned
expiry, another source said.
In a statement on Monday, Sharp said it had no set deadline for
sealing a deal. It added that it aimed for a deal "as soon as
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Shares in Sharp were down 3 percent in morning trade, bucking a rise
in the broader Tokyo market. The stock has lost a quarter of its
value since Wednesday's close.
If Sharp and Foxconn overcome the latest hitch and sign a deal, it
would be the largest acquisition by a foreign company in Japan's
insular technology sector.
(Reporting by Makiko Yamazaki and Taro Fuse; Editing by Ian
Geoghegan and Edwina Gibbs)
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