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(Bloomberg) — Sony Group Corp. (6758.T) shares surged after people familiar with the matter said it is mulling spinning off its semiconductor unit, raising expectations that such a move would unlock value in the Japanese entertainment and electronics company.
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The stock rose 7.1% in Tokyo, its highest close since March 28. It provided the biggest boost to Japan’s benchmark Topix index on Wednesday, which climbed 0.6%. The nation’s markets were shut for a holiday Tuesday.
Sony is considering the spinoff and listing of Sony Semiconductor Solutions Corp. and that may occur as soon as this year, according to a Bloomberg report. The conglomerate, which is also planning to spin off its financial arm, is partly following what Dan Loeb’s Third Point LLC had asked years ago.
“This is extremely positive for the stock, and while it’s a long time coming I don’t think there was much expectation priced in so it should price higher,” said Andrew Jackson, head of Japan equity strategy at Ortus Advisors.
“If dividends in kind are distributed to existing shareholders as part of the partial spinoff then it could also be seen as bolstering shareholder returns as another positive angle,” Jackson added.
Representatives for Sony and the chip unit said the article is based on speculation and there are no concrete plans.
Read: Sony Is Said to Mull Chip Spinoff Loeb Called for Years Ago
A spinoff of the semiconductor unit is “highly reasonable” and would be positive for the shares, Citigroup Inc. (C) analysts including Kota Ezawa and Takero Fujiwara wrote in a note after Bloomberg News reported the plan. If the semiconductor business is de-consolidated, valuation will likely see upside potential, they added.
Jefferies said spinoffs of the financial arm and sensor-business will unlock further upside for Sony. Its analysts including Atul Goyal and Shunki Nakamura said spinoffs of Sony Financial Group Inc. and the sensor-business would result in Sony becoming a pure entertainment company. “Sensor spinoff will allow for a potential re-rating,” they wrote in a note.
—With assistance from Alice French.
(Updates share move in second paragraph.)
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