- 10 Jan 2023
Sony is looking to sell up to 80% of its Financial Group it made a wholly-owned subsidiary in 2020.
Sony Weighs Financial Arm IPO to Fuel Big Investment Push
“Sony’s image sensor and entertainment businesses will need much bigger investment in the future. Meanwhile, you need a strong base for financial services,” Chief Operating Officer Hiroki Totoki said at the briefing. “That’s why we decided to consider using a virtual spinoff — which allows us to keep Sony’s name on the financial service arm while it gains the ability to raise cash independently.”
I suggested in the past that Sony might sell off its Finance Group just two weeks ago and that they might utilize the funds from the sell off to help it invest further in its core business elements.
"Sony Group has a market cap of 115 billion dollars. That's quite small compared to some of their competitors. Their competitors are Microsoft (2.27T), Apple (2.67T), Google (1.34T), Amazon (1.06T), Nvidia (696B), Tencent (410B), and even Netflix (141B). And Sony is largely split between Video Games, Movies, Music, Electronics, and even Finances (I can see them selling off their financial subsidiary to fund expansion elsewhere). And that isn't to say that any of their much larger competitors are all in on video games (they aren't)" - Mibu no Ookami, May 3rd, 2023
Their stock has increased from 115 to 119 billion with a significant gain from today's news that they'll be selling their financial group and investing that money elsewhere. I expect they'll get a decent bump after the showcase next week as well.
Here is where the speculation fits in as to where they'll spend that money. I still think T2 is by far the best buy that Sony could get. It checks so many boxes and I think they have fairly good reason to think they could get it past regulators now that the EU ruled in favor or the Activision buy and the CMA dismissed the console concerns.
Ultimately, a deal for T2 is going to cost upwards of 30 billion dollars, which I think will be a mixture of cash, financing, and stock consideration. Aside from T2 though, it's clear that they're interested in FromSoftware/Kadokawa.
I think Jim Ryan and Sony Group senior leadership has recognized some key points here
- The absolute bullet that they MAY have sidestepped with Microsoft attempting (and likely failing) to buy Activision Blizzard King
- That they're extremely vulnerable to the large money in the industry
- That if this deal is blocked that T2 could be a likely alternative for Microsoft.
- I think T2 and EA are the obvious next choices for Microsoft and that of the two the one that would hurt Sony more would be T2 and that T2 is cheaper to buy than EA.
- Sony also recognizes that Microsoft is embattled at the moment with the ABK deal so can't jump into T2 right now, so the timing is really key here.
Sony is looking to sell up to 80% of its Financial Group it made a wholly-owned subsidiary in 2020. Sony Weighs Financial Arm IPO to Fuel Big Investment Push “Sony’s image sensor and entertainment businesses will need much bigger investment in the future. Meanwhile, you need a strong base for...
Hmm very interesting, what do you think about it?