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Sharp shares slide on report it cut Hon Hai sale price | Sharp shares slide on report it cut Hon Hai sale price |
(35 minutes later) | |
Shares of Japan's Sharp have dipped after a report that it had offered to lower the price of its stake sale to Taiwan's Hon Hai Precision Industry. | Shares of Japan's Sharp have dipped after a report that it had offered to lower the price of its stake sale to Taiwan's Hon Hai Precision Industry. |
Hon Hai had agreed a deal to buy a 9.9% stake in Sharp at 550 yen per share in March. | Hon Hai had agreed a deal to buy a 9.9% stake in Sharp at 550 yen per share in March. |
However, Sharp's shares have plunged 66% since and the Nikkei newspaper reported that the sale will be based on an average stock price instead. | However, Sharp's shares have plunged 66% since and the Nikkei newspaper reported that the sale will be based on an average stock price instead. |
Sharp shares fell as much as 8% to 182 yen in Tokyo on Monday. | Sharp shares fell as much as 8% to 182 yen in Tokyo on Monday. |
This follows a 13% plunge on Friday after the firm's credit rating was cut to "junk" status by ratings agency Standard & Poor's. | This follows a 13% plunge on Friday after the firm's credit rating was cut to "junk" status by ratings agency Standard & Poor's. |
A "junk" credit rating means some institutions may no longer invest in the company, prompting many shareholders to offload its stock. | A "junk" credit rating means some institutions may no longer invest in the company, prompting many shareholders to offload its stock. |
To make matters worse, S&P warned that its credit rating for Sharp could fall further if the company's earnings and cashflow did not improve. | To make matters worse, S&P warned that its credit rating for Sharp could fall further if the company's earnings and cashflow did not improve. |
'Hoping to settle' | |
Shareholders have also been worried about the outcome of the proposed tie-up between Sharp and Hon Hai. | |
Under the terms of the deal, Hon Hai would pump about $800m (£500m) into Sharp in return for a near 10% stake in the Japanese consumer electronics maker. | |
However, there have been growing concerns that the deal may not happen at all. | |
Those fears were fanned further after Terry Gou, the chairman of Hon Hai, left Japan last week without an agreement between the two firms being finalised. | |
On Monday, the Reuters news agency reported that Sharp's President Takashi Okuda, was planning to visit Taiwan in a bid to finalise the deal. | |
"We can't disclose our executives' schedules, but we are hoping to settle the negotiations as early as possible," Sharp spokeswoman Miyuki Nakayama was quoted as saying by Reuters. |