Sony to take full control of listed financial arm for $3.7 billion

Reuters TOKYO | Updated on May 19, 2020 Published on May 19, 2020

Sony Corp said on Tuesday it will turn its listed financial arm, Sony Financial Holdings Inc, into a wholly-owned unit through a tender offer worth about 400 billion yen ($3.72 billion).

The deal will allow the Japanese electronics and entertainment giant to strengthen its presence in the fintech field to compete with global tech majors such as Alibaba Group Holding Ltd and Apple Inc.

It also reflects Chief Executive Kenichiro Yoshida's strategy of making revenue streams more stable, following a major revamp by his predecessor, which shifted Sony's focus away from low-margin consumer electronics to entertainment content and subscription-based businesses.

The deal is the biggest strategic move for Sony under Yoshida, since a $2.3-billion acquisition of EMI Music Publishing, announced soon after Yoshida took the helm in 2018.

“The financial business has a stable profit base in Japan,” Yoshida told presspersons and analysts in a briefing. Taking full control of the business “will help us hedge growing geopolitical risks.”

Sony, which will change its name to Sony Group next year, already owns 65 per cent of Sony Financial. It offers about 2,600 yen for each remaining Sony Financial share - a premium of about 26 per cent over Monday's closing price of 2,064 yen. The tender offer closes in July.

Sony Financial, a consistently stable revenue source for Sony, has banking, life and non-life insurance, credit card and nursing care businesses in Japan, with about 11,000 staff. Total assets stood at 14.5 trillion yen as of the end of last year.

It contributed operating profit of 129.6 billion yen in the year ended in March, or about 15 per cent of the group.

Sony expects the acquisition to have a positive tax-related impact of 40 billion to 50 billion yen annually on net profit.

The plan, first reported by the Nikkei business daily earlier on Tuesday, sent shares of Sony Financial up nearly 17 per cent to 2,412 yen, before trading of the stock was suspended. Sony Corp shares rose 3.3 per cent in a broader market that ended up 1.5 per cent.

Published on May 19, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.