NAGOYA, Japan — Sharp, the struggling Japanese technology company best known for making liquid-crystal displays, said Thursday it was leaning toward an acquisition offer from Foxconn, the Taiwanese contract manufacturer that assembles most of Apple’s products.
Foreign buyers that have attempted to take over Japanese companies in the past have often failed — thwarted by reluctant managers, a protectionist government or both — and the bid by Foxconn is looking like a test of the country’s economic openness.
Sharp’s chief executive, Kozo Takahashi, said Sharp would decide in the next month between competing offers from Foxconn, also known as Hon Hai Precision Industry, and an investment fund financed by the Japanese government. Foxconn is offering twice as much money — about 600 billion yen, or $5.1 billion.
Mr. Takahashi suggested that Sharp’s board favored the Foxconn offer, though he denied media reports that Sharp had granted Foxconn exclusive negotiating rights. Those reports, initially by the Japanese national broadcaster NHK, drove Sharp’s share price higher before Mr. Takahashi’s news conference, which was held after the market closed.
“We are putting more resources on the Hon Hai offer,” Mr. Takahashi said. “We are considering the offers from the point of view of all of Sharp’s stakeholders, its employees and shareholders.”
If Sharp chooses Foxconn, it would be a blow to efforts by the government-backed investment fund, the Innovation Network Corporation of Japan, to create a Japanese “national champion” manufacturer of liquid-crystal displays.
The fund had purchased the LCD businesses of three other well-known Japanese technology groups — Toshiba, Hitachi and Sony — combining them into a single company in 2012. But the company, Japan Display, has struggled. The fund had been hoping to add Sharp’s production volume — the largest in the country — to give it greater scale.
Though the government is offering less money, it has promised unspecified additional support from Japanese banks, which have kept Sharp from going under with emergency loans as its business has deteriorated.
Sharp has lost about $10 billion over the last half-decade as LCD prices have fallen and lower-cost manufacturers based elsewhere in Asia have grabbed its market share. It reported a ¥24 billion, or about $204 million, net loss for the latest quarter on Thursday.