Foxconn, a major supplier to Apple, said today it was in talks with Sharp to clarify a late hitch to its takeover of the Japanese firm, worth an estimated near-$6 billion.
The Taiwanese firm said it hopes for a "satisfactory agreement".
Just hours after loss-making display maker Sharp said yesterday that it had decided to sell a two-thirds stake to Foxconn, it said it put the deal on hold until it had clarified some "new material information" from Sharp.
Shares in Sharp slid 11% today after sources said previously undisclosed liabilities were responsible for the last-minute hitch.
"Most of the contents of the material information Foxconn received on Wednesday morning, before Sharp’s board meeting began on Thursday, had not been previously proposed nor offered during negotiations between the two sides," Foxconn said in a statement.
It added that both sides were consulting on the matter "with the aim of reaching a comprehensive understanding and resolution of the situation. We hope to reach a satisfactory agreement as soon as possible."
Terry Gou, founder of Foxconn, the world's largest contract maker of electronic goods, and Sharp CEO Kozo Takahashi were meeting in China, said a person familiar with the matter.
The 11th-hour delay has thrown into doubt Foxconn's quest to gain Sharp's advanced screen technology and strengthen its hand with major client Apple.
A deal was also supposed to have signalled the opening up of Japan's insular tech sector to foreign investment.
Sharp had contingent liabilities of around 300 billion yen ($2.7 billion), three sources said - almost double its 160 billion yen capital.
That contrasts with Foxconn's due diligence which revealed liabilities of below 100 billion yen, one of the sources said.
The sources, who declined to be identified due to the sensitivity of the matter, did not elaborate on the nature of the liabilities.
Sharp said in a statement earlier today that it has been disclosing its contingent liabilities properly.
In a 31-page filing, Sharp said it would issue around $4.4 billion worth of new shares to give Foxconn a two-thirds holding. Foxconn's investment is set to total more than 650 billion yen ($5.8 billion), a source familiar with the matter has said.
Gou has spent roughly five years courting Sharp and if a deal goes through, it would boost Foxconn's position as Apple's main contract manufacturer.
It would also enable Sharp to start mass-producing organic light-emitting diode (OLED) screens by 2018, around the time Apple is expected to adopt the next-generation displays for its iPhones.
Bringing Sharp under Foxconn's umbrella could help Apple wean itself off rival Samsung Electronics as a supplier.
OLED screens are thinner, lighter and more flexible than current displays. South Korea's Samsung Display and LG Display are also investing heavily in the new technology.
But efforts to patch up the deal could be impeded by lingering distrust over the collapse of a 2012 deal to form capital ties.
That distrust was one reason why some Sharp officials had preferred a lower offer by the state-backed Innovation Network Corp of Japan (INCJ), sources said.