Sony intends to take finance arm private for around $3.7 billion
Sony Corp. announced it plans to take full control of its finance unit for around ¥395.5 billion ($3.7 billion), buying out one of its most profitable business units.
The electronics juggernaut said in a statement on Tuesday that it will offer ¥2,600 per share for part of Sony Financial Holdings Inc. which it doesn’t already own. That’s a premium of almost 26 per cent to Monday’s close. Shares in the finance unit rose 19 per cent on Tuesday, while Sony gained more than 3 per cent.
Last week, Sony warned that operating profit could drop by 30 per cent or more this fiscal year due to the impact on production and consumption from the coronavirus pandemic. The financial services business, one of its most lucrative, had experienced a decline because its sales staff can not go out to pitch customers on insurance and other services, it said. The difficulty in forecasting future performance for that unit affected Sony’s ability to provide a companywide projection for the year.
“The move could help stabilise Sony’s income even when electronics firms are in trouble,” said Kazunori Ito, an analyst at Morningstar Research. But “there’s no synergy between the domestic financial units and other arms.”
In recent years, Chief Executive Officer Kenichiro Yoshida has overhauled the electronics icon to concentrate on franchises like sensors for smartphone cameras and the PlayStation gaming business. Activist investor Dan Loeb has been calling for a sale of the finance operation; however, Yoshida has said that the division, which sells insurance policies among other products, is vital to maximising the value of the company.
Since 2001, the Tokyo-based company, which is also a major Hollywood entertainment producer, has diversified into banking. Sony Financial itself was established in 2004 and at one point, was expected to bring in the majority of the operating profit of the Japanese conglomerate.