Sony To Convert Its Financial Subsidiary Into Wholly Owned Unit Through $3.7B Tender Offer

Sony Corp SNE is turning its arm Sony Financial Holdings Inc. SYFHF into a wholly-owned unit.

What Happened

In an attempt to strengthen its fintech presence, the Japanese conglomerate will take full control of its financial arm, Sony Financial Holdings, through a tender offer worth $3.72 billion, reported Nikkei Asian Review on Tuesday. 

After Sony taking full ownership of its financial unit, it would be better able to compete with companies such as Alibaba Group Holding Ltd. BABA and Apple Inc. AAPL

The move will allow Sony to combine its artificial intelligence and other technologies verticals with Sony Financial, which owns a bank as well as life and non-life insurance businesses.

Why It Matters

An economic downturn, caused by the COVID-19 pandemic, has provided Sony the opportunity to act now, whilst the share prices are low, according to the Review. 

Sony already owns 65% of its financial subsidiary and will purchase remaining shares at about $24.21 per share. This is a premium of 30% over Monday’s closing price of $19.22 in Tokyo.

After the tender process is completed this summer, Sony Financial will be delisted and operate as a 100% wholly-owned subsidiary of Sony. 

Sony Financial holds nearly $136.06 billion in assets, making it the largest Japanese financial institution related to a listed non-financial company.

Sony Price Action

Sony Financial Holdings shares closed 16.86% higher at $22.44 on Tuesday in Tokyo, while on Monday, its OTC shares closed 0.94% higher at $19.38.

Sony shares closed 3.25% at $64.24 on Tuesday in Tokyo. The company’s shares traded 0.52% higher at $64.40 in the after-hours session on Monday in New York.