Embattled Sharp said Thursday it has accepted a multi-billion-dollar bailout from the parent company of Taiwan's Foxconn, marking the first foreign takeover of a major Japanese electronics firm.
The deal, beating out a rival offer from a Japanese investment fund, will see Hon Hai Precision buy a 65.9 percent majority stake in Sharp worth 489 billion yen ($4.34 billion), it said.
Earlier media reports said the whole deal, agreed at a Sharp board meeting Thursday, could be worth as much as $6.2 billion.
Sharp's volatile stock gyrated wildly on the reports before trading in the Tokyo-listed stock was suspended pending the regulator's announcement.
It dived as much as 17 percent when trading resumed on fears the deal would dilute the value of current investors' shares.
The takeover ends speculation over whether Sharp would choose an offer from major Apple supplier Hon Hai or the public-private Innovation Network Corporation of Japan (INCJ).
Media reports suggested the Taiwanese firm's offer would keep Sharp intact, while it would be broken up under a rival bid from the Japanese firm.
Despite its bleeding balance sheet, Sharp remains a leader in liquid crystal display technology, a key asset for Hon Hai.
The pair have worked together for years on large-sized screen technology, including for televisions, and industry watchers applauded the rare foreign takeover of a Japanese giant.
"Hon Hai and Sharp complement each other," said Yukihiko Nakata, a technology professor at Ritsumeikan Asia Pacific University and a former Sharp engineer.
"Sharp is strong in research and development while Hon Hai knows how to market products to customers such as Apple and it also has expertise in production... Together they can go global."
Nakata threw cold water on the rival Japanese bid, saying it would not have been a good fit.
"The only advantage was economies of scale but that alone is not enough to compete in the global market," Nakata said.
- Fall from grace -
This month, Sharp's chief Kozo Takahashi refused to be drawn on which offer he favoured, but said his company was putting "more manpower" into evaluating the Taiwanese offer.
Media said the government was concerned about the company's key technologies falling into the hands of a foreign firm.
However, some critics warned against a government-backed bailout, pointing to Sharp as a prime example of a so-called zombie company that should be allowed to die.
Japan Inc. is littered with money-losing firms kept alive through bailouts and other assistance, partly to avoid massive job losses.
Century-old Sharp, which supplies smartphone and tablet screens to Apple but started life making belt buckles and pencils, was once among Japan's leading firms and its brand was internationally recognised.
The company's name once graced the jerseys of Manchester United players, but it has long since withdrawn from sponsoring the English Premier League football side.
Sharp has teetered on the edge of bankruptcy for years, piling up eye-watering losses and struggling through a restructuring plan that has yet to pull it out of the red.
This month, the firm posted a whopping nine-month net loss of more than $900 million, hit by restructuring costs and a slump in demand for its smartphone screens.
Along with rivals Sony and Panasonic, Japan's electronics giants were hammered by steep losses in their television units owing to stiff competition from lower-cost rivals, particularly in South Korea and Taiwan.
They were also outmanoeuvred in the mobile phone business, but Sony and Panasonic have seen improving results lately.