Sony Corp, based in Japan announced recently that it has purchased EMI Music Publishing for about $2 billion to enable it become the leading company in the image sensors and music.
According to terms of reference, Sony will obtain 60% equity interest from the conglomerate. The company currently owns about 40% of EMI and for several months, Sony has been trying to strike a deal to purchase the entire company.
The transaction is expected to close in the next few months subject to satisfactory approvals and other requirements. The deal will make Sony to have 90% shares of the EMI publisher.
The Turnaround Strategy
Sony is one of the leading music publishers across the world and the addition of EMI Music Publishing will enable the firm to grow its great position in the music publishing industry by killing off its potential rivals.
Sony has focused on the image sensors and since there is a significant demand for the products especially for smartphones, the firm’s revenues have drastically increased in the recent past.
The plans to turnaround the company were initiated by its former chief, Kaz Harai, who was later replaced by Kenichiro Yoshida who has a three-year plan complete his predecessor’s work.
The transaction stipulates that Sony will pay $1.9 billion for its additional 60% equity share from the new company to make it a total of $2.3 billion. According to Bernstein & Co based in Hong Kong, the price is a higher side for the strategy that demands the firm to shift from hardware to content.
The deal is expected to help in reviving the falling movie studio business unit by doubling its high-quality standards in the theatre rooms and other facilities as part of its long-term strategy to enhance the consumer experience. Recently, Sony also purchased shares in the Charles Schultz’s cartoon, Peanuts.
Furthermore, Sony intends to invest more in advancing its first-party gamers and add-on content. Music industry has greatly been transformed especially with the use of advanced technology and innovative products that have boosted the sales of the music songs.
For instance, the rapidly growing paid streaming service particularly from Sportify Ltd and Apple Inc have significantly improved the music industry revenues for the last three years.
After analysing the company’s internal mechanisms, the shareholders including the board of directors made the decision to support the management in executing the business idea.