Sony Launches $3.7B Takeover Bid For Sony Financial Unit

By Benjamin Horney
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Law360 (May 19, 2020, 1:01 PM EDT) -- Sony is launching a roughly 400 billion yen ($3.7 billion) takeover offer for insurance and financial services unit Sony Financial Holdings Inc., saying that both businesses will be better served under one roof, even as the novel coronavirus continues causing global economic turmoil.

Sony Corp. intends to launch a tender offer for all the shares it does not already own in publicly traded Sony Financial for 2,600 yen per share, according to a Tuesday statement, which represents a 26% premium to Monday's closing price. The transaction is meant to give Sony 100% ownership of Sony Financial, which is a financial holding company that is listed on the Tokyo Stock Exchange

Sony Financial houses businesses like insurance company Sony Life, auto insurance company Sony Assurance, financial services company Sony Bank, financial technology company Sony Payment Services Inc., nursing care business Lifecare Design Inc. and investment unit Sony Financial Ventures Inc. Sony Financial was established in 2004, and in 2007 the unit held an initial public offering.

Currently, Sony owns 65.04% of Sony Financial, or roughly 283.05 million shares. 

Sony has been looking into launching a tender offer for months, and the company said that during due diligence it took into account the potential effects of the COVID-19 outbreak on the business world at large, as well the pandemic's impacts on Sony and its associated companies.

"It is not considered unreasonable to conduct the transaction at this time even based on the current situation in which there is a certain amount of disruption due to the spread of COVID-19 infections," Sony said.

Sony's decision may be met with disdain from certain shareholders, including activist investment firm Third Point LLC, which has previously pushed the company to separate some of its businesses instead of continuing to acquire more Sony units.

Last year, Third Point — which is the hedge fund of activist investor Daniel Loeb — urged Sony to spin off its semiconductor business, saying such a move could serve to improve the value of Sony's stock. Sony rejected Third Point's push in September, saying it weighed the potential split but found that holding onto the unit was the "best strategy for enhancing Sony's corporate value over the long term." 

Third Point has also questioned Sony's holdings in other entities, including in Sony Financial Holdings. 

Nagashima Ohno & Tsunematsu, Mori Hamada & Matsumoto and Cleary Gottlieb Steen & Hamilton LLP are acting as legal advisers to Sony, and Oh-Ebashi LPC & Partners is acting as legal counsel to a special committee for Sony that is involved in the tender offer process.

The Cleary Gottlieb team included partners Chris Austin, Adam Fleisher and Jim Langston and associates Max Wade and Matt Kelleher, with assistance from partner David Lopez, counsel Jonathan Gifford, senior attorney David Stewart Fisher and associate Amy Hinz. 

--Additional reporting by Chelsea Naso. Editing by Orlando Lorenzo.

Update: This story has been updated to include additional counsel information.

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