Taiwanese contract manufacturer Foxconn put its takeover of Japanese display giant Sharp on hold after discovering previously undisclosed liabilities worth "hundreds of billions of yen", halting what would have been the biggest acquisition by a foreign firm of a Japanese tech company.
Sharp, after two days of consecutive board meetings, initially agreed to the $6.2 billion deal offered by Foxconn, or Hon Hai Precision, over another offered by a local state-fund.
Foxconn, however, said afterwards in a statement that it would not sign until it had clarified terms in the face of new material information from Sharp, but did not elaborate. Unnamed sources told Reuters that the new information was contingent liabilities amounting to hundreds of billions of yen, or billions of dollars, and that the issue must be resolved for the deal to pass.
Debt-ridden Sharp had previously been leaning towards accepting Foxconn's deal, which was considerably larger than a rival bid made by Network Corp of Japan.
The Japanese display giant -- which owns core technology on Liquid Crystal Display -- was bailed out last year in May but continued to post losses.
Foxconn chairman Terry Gou had personally visited Osaka, where Sharp is headquartered, to convince Sharp to accept the deal. The company, best known for contract making iPhones, is reportedly attempting to diversify is revenue sources following Apple's lowering of orders and the saturation of the smartphone market.
The Japanese tech sector is incredibly insular, and the company is not fond of sharing its technology with foreigners, especially with East Asian neighbours and industry competitors China, Taiwan, and South Korea.
Sharp, once the dominant player in displays, lost out to Samsung and LG in the mid-2000s and is being further threatened by rising Chinese vendors.