Sony Sells Financial Stake to Fund Games Unit
Sony spins off its insurance company, to raise cash for its other businesses.
Sony announced that it will be selling its stake valued at ¥332 billion ($2.9 billion) in its Japanese insurance business, Sony Financial Holdings Inc., in Japan's largest initial public offering (IPO) of the year to help fund its electronics and gaming divisions. As of October 1, Sony will sell its 725,000 shares (34.5 percent of its shares) and issue and additional 75,000 at about ¥415,000 per share.
"Sony could use the funds for various options to strengthen its electronics and game businesses," said Mitsuhiro Osawa, a Tokyo-based analyst at Mizuho Investors Securities Co. with an "Outperform" rating on Sony's stock. "A cut in the price of the PlayStation 3 is one option."
JPMorgan Chase & Co. and Nomura Holdings Inc. are managing the offering, Japan's biggest since Aozora Bank Ltd.'s ¥351 billion offering last November. Sony Financial will raise ¥31.1 billion from the sale and plans to invest ¥16.5 billion in a venture with Aegon NV, the second-largest Dutch insurer. The division holds Sony Life Insurance Co., automobile insurer Sony Assurance Inc. and online bank Sony Bank Inc.
T&D Holdings Inc., Japan's only publicly traded life insurer, fell 16 percent this year along with the majority of financial and insurance companies. "Investors are still concerned about the losses from subprime loans. The question for the Sony Financial IPO is how it can persuade investors that it is free from that concern," commented Wataru Kasatani, a financial analyst at Meiji Dresdner Asset Management Co.
Shares of Sony (SNE) rose 2.70 percent to $49.07 during trading Tuesday.
The question is why?
They have substantial securities in electronics and the movie industries, why not skim off the top of them and funnel it into the Game devision,its obvious its going to need more than 3bill to get the PS3 to stable waters.
They might have offset its current debt but the PS3 is going to cost more and more as the years come.....
I guess unlike MS Sony is a multi headed dragon that dose not like sharing with it and each head has multiple personal disorders...
Oh and before I forget anyone read anythign in to this? were they planing to dump it anyway? is the real story money for the game devision or is somethign else cooking?