Sony Poised To Buy Finance Unit for $3.7 Billion (Report)

Japanese electronics to entertainment giant Sony is expected to offer up to $3.7 billion (JPY400 billion) to take full control of its finance division. The move would shore up its profits.

Sony president and chief executive Kenichiro Yoshida is scheduled to make an hour-long presentation on group strategy on Tuesday afternoon local time. The Nikkei newspaper said that the move to take private the finance division would be announced then.

Sony Corp. currently owns 65% of Sony Financial. It will make a tender offer of JPY2,600 per share. The unit controls assets of $13.5 billion (JPY14.5 trillion) and last year made profits of $1.21 billion (JPY130 billion).

Finance industry commentators said that Sony is following in the tracks of other media-tech companies Apple and Alibaba and taking full control of their finance arms at a time of financial uncertainty. It would also allow Sony to compete more strongly in the fast-expanding fintech business.

During an earnings call last week, after presentation of Sony’s annual results, chief financial officer Hiroki Totoki said that Sony is in a strong position to make strategic investments or acquisitions. Totoki said that Sony had prudently managed its financial resources and had close to $9 billion (JPY910 billion) of cash on its balance sheet at the March year end. A further $14.7 billion of credit and commercial paper programs were also unused and available.

Sony has come under repeated pressure from activist investor Daniel Loed and his Third Point Capital company. A few years back Loeb pressured the company to sell off its filmed entertainment businesses, but was resisted. In 2019, Loeb called for disposal of the semiconductor business. That suggestion was rebuffed at the time, but Loeb renewed the call in March this year and pointed to Sony’s depressed share price.

For the year that ran from April 2019 to March 2020, Sony reported group profits down by 36% to $5.34 billion (JPY582 billion). Group revenues were down 5% at $75.7 billion (JPY8.26 trillion). Revenue and net profits at the film, TV and channels division were up from $489 million in the previous financial year to $628 million.