Sony Semiconductor Israel’s potential sale has stirred controversy. Originally known as Altair Semiconductor, the Israeli firm is expected to attract strong interest from major players in the semiconductor industry and financial investors if the deal moves forward.
Sony might sell its Israeli chip unit
Source Cryptopolitan
Sony Group, the Japanese multinational conglomerate, is shifting its focus toward the entertainment sector and exploring the sale of one of its tech units. According to three sources familiar with the matter, the company has begun working with investment bankers to sell Sony Semiconductor Israel, its division specializing in connected devices with cellular chipsets.
Sony Semiconductor Israel had annual recurring revenue of about $80 million. Considering its incredible benefit, the price at which it would be sold is approximately $300 million.
Still, the discussions are in the early stages and remain confidential.
Sony intends to sell Sony Semiconductor Israel to start off a new business strategy
The Israeli developer’s main play in the market is to build cellular chipsets for devices such as smart meters, domestic appliances, and wearables.
In 2016, Sony acquired the Israeli chipmaker—then known as Altair Semiconductor—for $212 million. Since then, the company has increasingly concentrated on its entertainment divisions, such as movies, music, and gaming, which accounted for roughly 60% of its total profit last year.
The Japanese tech giant is planning a partial spinoff this year as part of a broader strategic shift. The move includes a direct listing of its financial services division, a key step in the restructuring process.
Back in April, Sony revealed it was evaluating various options for its semiconductor business, including bringing in investment partners or adopting a fab-light model if needed. The company remains a major player in the global image sensor market.
Sony secures the first partial spin-off in Japan
Previously, Sony was due to present the growth plan for its financial arm, confirming prospects for a spin-off that investors have embraced as the newest phase of the company’s makeover.
The financial spinoff reflects the convoluted journey of the Japanese company that has taken less than four years since the conglomerate acquired complete business ownership in a $3.7 billion deal.
Sony executives chose an investor day as the perfect day to discuss the company’s spin-off and its growth strategy for the financial unit.
In the meantime, the company revealed intentions to divest slightly more than 80% of its shares in Sony Financial Group, which has banking and insurance operations, to shareholders as a dividend in kind.
It is worth noting that this is the first partial spin-off in Japan that has greatly benefited from a tax change and the first direct listing in over twenty years, scheduled for September 29. In a direct listing, a company sells shares directly to the public without a typical initial public offering.
On the other hand, in the case of a spin-off, separation will occur, dividing the financial records of the non-financial businesses that aim to use capital and assets efficiently from the financial business that grows by gathering capital. According to Sony, this is essential in enhancing investors’ understanding of their goals.
In addition to the above, the spin-off will enable a high-stakes breakup on a large scale under a short-term schedule with a low level of risk, Sony said, compared with an IPO.
Hideki Somemiya, the chief financial officer of Resonac, a materials firm that aims to spin off its petrochemicals unit in two years, stated the benefits of a partial spin-off, which included its tax-free nature, in line with Western practices, and will allow large Japanese companies to put an end to their conglomerate discount.
Under the new strategy, Sony will retain a stake of about 20% as the financial business operates using its brand through a licensing agreement.
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