Japan’s Sharp Corp. plans to buy Toshiba’s personal-computer business as its Taiwanese parent company, Foxconn Technology Group, seeks to build beyond contract manufacturing. Foxconn Tech is issuing $1.8 billion in new shares to buy back preferred stocks from banks to highlight its recovery.
The preferred shares are being bought back because originally it was issued to banks in return for a financial bailout to reduce high interest payments. The new issue will cause more than 10% in dilution.
The acquisition cost 4 billion yen or $36 million for Sharp, with the plan to complete the sale by October 1st. It was their first time getting back into the PC market since the company abandoned the niche market eight years ago. The low cost acquisition represents the lessening demand for personal computers when consumers are more focused on spending money on smartphones.
Toshiba released the world’s first laptop PC in 1985, and it has continued to sell laptops and tablets under Dynabrook. The company peaked with 17.7 million PC sales in 2011. Its PC sales has since declined to 1.4 million units in 2017. The company has had to sell units to repair their balance sheet after bankruptcy from a nuclear energy subsidiary.
The Japan-based electronics makers will use its tools with the largest contract manufacturer in Foxconn to produce PCs cheaply with its extensive supply chain. Sharp will take 80.1% stake in Toshiba’s PC unit on October 1st and keep the Dynabrook brand.
Foxconn CEO Terry Gou has been looking for ways to reduce its reliance on Apple Inc. which has accounted for more than half the company’s revenue.