Hon Hai Precision Industry Co., Ltd., better known as Foxconn Technology Group for supplying Apple’s iPhones, will jump into a deal to acquire Tongyang Magic, Korea’s home appliance manufacturer and rental company. It is likely the Taiwanese firm would use Sharp Corp. of Japan as the official entity in the deal. That way, the company intends to raise the corporate value of Sharp while nurturing it as an international integrated electronics maker linking the three East Asian countries of Japan, China, and Korea.
According to investment banking sources on August 1, Foxconn has decided to take part in the deal to take over Tongyang Magic sold by homegrown private equity firm Glenwood Private Equity. It was reported that the Taiwanese firm has selected a foreign investment bank as the lead manager. An investment banker said, “Foxconn must have figured that it would benefit from a lot of synergies by combining its manufacturing capability, Sharp’s brand reputation, and Tongyang Magic’s marketing know-how.”
Established in 1974, Foxconn has become famous after producing Apple iPhones under an original equipment manufacturing arrangement at its Chinese plant. Recently it acquired Japan’s Sharp while founding an electric vehicle joint venture with China’s Tencent.
Market watchers estimated that the acquisition price for Tongyang Magic would be about 500 billion won. Earlier in 2014, Glenwood bought the company at 279.8 billion won. During the time, its sales revenue increased from 321.9 billion won in 2013 to 390.3 billion won last year. The company’s EBITDA (earnings before interest, taxes, depreciation and amortization) has also increased from 49.4 billion won to 69.2 billion won.