Sony to make case for finance arm spin-off in latest corporate transformation
TOKYO - Sony (SONY, 6758.T) will on Thursday lay out the growth strategy for its financial arm set for a spin-off that has been welcomed by investors as marking the latest chapter in the company's transformation.
US-listed shares of Sony were over 3% higher in premarket trading on Tuesday.
The Japanese conglomerate, once best known for household electronics, has received plaudits for shifting its focus to entertainment, which totals more than 60% of sales.
The financial spin-off reflects the tangled path Sony has taken, coming just four years after it took full control of the business in a $3.7 billion deal.
Sony executives will address the spin-off and the financial unit's growth strategy at an investor day on Thursday.
The company plans to distribute just over 80% of its shares in Sony Financial Group, which includes banking and insurance, to shareholders through dividends in kind.
It is the first partial spin-off in Japan taking advantage of a 2023 tax change and the first direct listing - set for September 29 - in more than two decades.
In a direct listing a company lists on the stock market without a traditional initial public offering.
The spin-off will separate the balance sheets of the non-financial businesses, which seek capital and asset efficiency, and the financial business, which expands by accumulating capital, helping investors understand their aims, Sony said in response to questions from Reuters.
Compared with an IPO, the spin-off will allow a large-scale separation in a relatively short time with low risk, Sony said.
"The partial spin-off has finally become tax-free, aligning with Western practices and giving an option for large Japanese companies... to shrink their conglomerate discount," said Hideki Somemiya, chief financial officer of materials maker Resonac, which aims to spin off its petrochemicals business in two years.
Sony will retain a stake of just under 20% with the financial business licensing its brand.
THAT'S ENTERTAINMENT
The Japanese company aims to expand its presence in entertainment, spanning from games to movies and music, and maintain its position as the leading manufacturer of image sensors, a type of semiconductor, for smartphones.
"It is necessary to invest in the manufacturing process," Sony CEO Hiroki Totoki said of its chips business this month.
"Whether we do this 100% by ourselves, bring in investment partners or adopt a fab-light type of strategy, there are a number of options," he said.
In addition to manufacturing image sensors, Sony has partnered with Taiwan Semiconductor Co Ltd on the contract chipmaker's Japan venture.
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