Sony agrees to sell Vaio PC unit to JIP

According to a release, an agreement has been reached with a view to concluding the transaction by the end of March, subject to due diligence and further negotiations on terms. It will be one of the country's highest-profile corporate divestments and part of a business reorientation strategy that would allow Sony to focus on smart phones.

The deal will see JIP establish a new company into which Sony will sell its entire PC business. The new entity is expected to continue to focus on the sale of consumer and corporate PCs in the Japanese market under the Vaio brand.

In addition, it will seek to optimize its sales channels and scale of operations while reviewing the possibility of further geographic expansion.

The divestment would push Sony into a net loss for the first time in two years for the year ending March 2014, a period for which it previously projected a JPY30 billion profit.

Sony's annual PC shipments are projected to reach 5.8 million units for the current financial year, well short of the peak of 8.7 million units. The company was the ninth-largest PC maker globally in the first nine months of 2013, with a 1.9% market share, according to market intelligence firm IDC.

This is the latest in a series of private equity carve-outs seen in Japan in recent months, with KKR buying Panasonic's healthcare unit and Advantage Partners acquiring the Sanyo Electric digital camera business, which was also owned by Panasonic. Furthermore, The Longreach Group picked up a precision drilling business from Hitachi and plastics manufacturer Sol-Plus Group from Arrk Corporation.

Last month JIP bought Biglobe, Japan's fourth-largest internet service provider (ISP) by number of customers, from NEC.

However, Richard Folsom, representative partner at Advantage, told the Hong Kong Venture Capital and Private Equity Association's Asia forum last month that he was disappointed by the number of carve-outs relative to the size of the opportunity. He said the weakening of the yen had eased pressure on many large corporations, leading to delays in restructuring and divestments.

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