Shares of Sony Group (SONY -0.90%) rose on Tuesday. The company's stock was up 4% by the time the market closed. The move up comes as the S&P 500 jumped 2% and the Nasdaq Composite jumped 2.4%.
Reuters reported that Sony will distribute 80% of newly created shares from the upcoming spin-off of its financial services arm. More details will be revealed in the company's Investor Day on Thursday.
Shareholders will benefit
Sony took full control of Sony Financial Services several years ago, but after a change in Japanese Tax law, the company is spinning off the finance arm. The news that current Sony shareholders will receive 80% of the newly created shares helped boost its stock today. On Thursday, the company will reveal more details of its growth plan for the newly created company.
The spin-off and direct listing, a move more common outside of Japan, is set to be the first partial spin-off under a 2023 tax law and the first direct public listing in over 20 years in Japan. The chief financial officer (CFO) of another Japanese company looking to follow suit told Reuters, "The partial spin-off has finally become tax-free, aligning with Western practices and giving an option for large Japanese companies... to shrink their conglomerate discount."
Image source: Getty Images.
Sony will be more streamlined
The move is positive as it allows the company to refocus on its core businesses: entertainment and consumer electronics. It will free up capital to invest in these areas, especially the company's image sensors, critical for smartphones. Sony has solid growth prospects and valuable intellectual property on the entertainment side, and a proven record of innovation in consumer electronics. I think its a good pick, especially as it refocuses post spin-off.
