New Delhi: Sony Group Corp. is close to finalising a major deal that could reshape its consumer electronics business. The Japanese technology powerhouse is also in serious negotiations to sell the majority of its home entertainment unit to TCL Electronics Holdings Ltd in China, which is said to be worth about $1 billion. According to the sources well-informed about the talks, both companies are hoping to declare the deal as early as this month, though the talks are still going on.
The representatives of the two companies have admitted that the negotiations are under progression, but they did not go further as to confirming an agreement. Assuming it is done, the transaction would be a huge change in the way Sony has been reorganising their operations and concentrating on content-driven operations instead of hardware.
Joint venture plans already in motion
Sony and TCL had previously indicated that they were going to work together. In January, both firms declared they would enter into a joint venture in the home entertainment business of Sony, including the renowned brand of television, Bravia. In the suggested arrangement, TCL would own 51 per cent of the company, with Sony owning the remaining 49.
It is anticipated that the joint venture would commence in April 2027. It will produce televisions with Sony and Bravia branding but based on the technology of TCL displays. This action underscores the fact that TCL is becoming stronger in terms of manufacturing and display innovation.
Sony’s strategic shift away from electronics
The possible sale is also in line with the overall corporate strategy of Sony to refocus on high-margin businesses. The company has been spending a lot of money on intellectual property such as anime, films, music and sports broadcasting rights. Meanwhile, it has been steadily diversifying out of its traditional consumer electronics.
Sony Company shares have not had it easy this year; the company has plummeted at least 21 in Tokyo trading. The company has a present market value of some $123 billion.
In the case of TCL, the acquisition is a significant move towards achieving international presence. The Chinese electronics company has long been seeking to enhance its command on the foreign markets. Cooperation with Sony would help it increase its brand awareness and technology coverage considerably.
TCL stocks have been performing averagely in 2013, with returns of approximately 4 per cent in Hong Kong. The market worth of the company is at the present about $3.5 billion.