Sony to sell US HQ building for $1.1B
Sony said it is selling its U.S. headquarters in Manhattan for US$1.1 billion, which will help tide the financially-strapped Japanese electronics giant over while it is in the midst of improving its business.
AFP reported Friday the Japanese electronics maker has sold the 37-storey building to a consortium led by New York-based commercial property firm Chetrit Group in a deal expected to close this March. The deal will net Sony US$770 million after paying off building-related debt and transaction costs, it added.
Its various business units, including music and movie divisions, would remain in the building for another three years under a new lease agreement, but will leave it once the tenure ends, the report stated.
In a statement reported by AFP, Sony said: "Sony is undertaking a range of initiatives to strengthen its financial foundation and business competitiveness and for future growth. At the same time, Sony is balancing cash inflows and outflows while working to improve its cash flow by carefully selecting investments, selling assets and strengthening control of working capital such as inventory. This sale is made as a part of such initiatives."
A separate report by the Wall Street Journal (WSJ) Thursday revealed the deal is a big boost for Sony as it is more than four times the amount it had paid for when acquiring it from AT&T in 2002.
Nicole Seligman, president of Sony America, said in an internal memo to employees: "As we had hoped, there was great interest in this iconic building. Given the opportunities and challenges in the current economic and real estate landscape, selling 550 Madison now is a timely and logical strategic move."
On Thursday, Sony CEO Kazuo Hirai said his company's recovery was not yet complete but it is heading in the right direction. Amid its financial troubles, Sony has carried out a series of job cuts and venue closures to ease costs and stay afloat.
For its earnings in the second quarter ended Sep. 30, 2012, the company narrowed its losses to US$15.5 million from US$27 million a year ago.