Apple (NASDAQ:AAPL) supplier Foxconn is to acquire Japanese electronics maker Sharp in the largest foreign takeover of a Japanese tech firm.
The $6bn deal will help Taiwan-based Foxconn, formerly known as Hon Hai Precision Industry, strengthen its relationship with tech giant Apple.
Foxconn will take a 66% stake in Sharp, which will now start working to produceorganic light-emitting diode screens by 2018.
This is also around the time Apple is expected to adopt the next-generation displays for its iPhones.
Hon Hai initially benefited as the main assembler of Apple’s iPhone since its launch in 2007, but analysts have grown concerned the firm may start to fall back as it is faced new challenges due to slowing iPhone sales and the entry of rival assembly groups.
This deal will likely relieve some of these concerns, according to some analysts.
According to reports, the deal is the fourth largest foreign acquisition of a Japanese company following Citigroup’s $7.9bn purchase of Nikko Cordial, the $6.9bn deal between General Electric and Japan Leasing in, and Vodafone’s $6.5bn acquisition of Japan Telecom.
Sharp’s board have reportedly backed Foxconn’s offer over a rescue plan offered by the state-backed fund Innovation Network Corporation of Japan.
Foxconn founder Terry Gou is said to have long been interested in Sharp, making a personal investment in the firm in 2012.
Sharp will issue around $4.4bn (£3.98bn) worth of new shares to Foxconn, sending its share price plummeting.