Hon Hai has clinched a deal to acquire a strategic stake in Taiwanese operator Asia Pacific Telecom, with an eye to taking over the business.
Hon Hai subsidiary Ambit Microsystems will pay TW$11.7 billion ($388.3 million) for 583 million new APT shares, Bloomberg reported.
After the transaction, Ambit will own around 15% of APT. The two companies will then negotiate for a full share-swap merger.
Ambit hopes to find an international partner to take on a 30% stake in APT post-merger. China Postreported that Japan's Softbank is considered one of the most likely partners, due to Hon Hai chairman Terry Gou's close relationship with Softbank CEO Masayoshi Son.
Hon Hai and APT were reported to have been negotiating over the investment earlier this month.
Both Ambit Microsystems and APT acquired spectrum during Taiwan's recent $4 billion 4G auction, and the merger appears to be aimed at joining forces for the deployment of 4G services.
Hon Hai, which trades as Foxconn and is a key iPhone assembler, is seeking to diversify its business beyond contract manufacturing.