Vertical Divider
Huawei to Sell Honor to Digital China (and the Shenzhen Government) for $15.2b
Honor sells smartphones through its own websites and third-party retailers in China where it competes with Xiaomi, Oppo and vivo in the market for lower-priced handsets. It also sells its phones in Southeast Asia and Europe. Honor-brand smartphones made up 26% of the 51.7 million handsets Huawei shipped in July-September, estimates from researcher Canalys showed. Huawei is expected to ship 180m smartphones in 2020, so the sale alone would cut Huawei’s annual volume to 115m.
Huawei plans to sell budget-brand smartphone unit Honor in a 100 billion yuan ($15.2 billion) deal to a consortium led by handset distributor Digital China and the government of its home town of Shenzhen, people with knowledge of the matter told Reuters. The sale also indicates little expectation for any swift change in the U.S. perception of Huawei as a security risk following a new U.S. administration. The all-cash sale will include almost all assets including brand, research & development capabilities and supply chain management. Huawei could announce it as early as this week. Main Honor distributor Digital China Group Co Ltd will become a top-two shareholder of sold-off entity Honor Terminal Co Ltd with a near-15% stake, said two of the people. Honor Terminal was incorporated in April and is fully owned by Huawei, the corporate registry showed. Digital China, which also partners Huawei in businesses such as cloud computing, plans to finance the bulk of the deal with bank loans, the two people said. It will be joined by at least three investment firms backed by the government of financial and technology hub Shenzhen, with each owning 10% to 15%, they said. After the sale, Honor plans to retain most of its management team and 7,000-plus workforce and go public within three years, the people said, declining to be identified due to confidentiality constraints. “The … synergy with potential buyers actually can be Honor’s IoT (Internet of Things) business, which can see potential upside.”
Huawei established Honor in 2013 but the business mostly operates independently. Divestment will mean Honor is no longer subject to Huawei’s U.S. sanctions, analysts said. Honor’s products also include laptops, tablet computers, smart TVs and electronic accessories. With margins thin for lower-end phones, Honor booked about 6 billion yuan in net profit on revenue of around 90 billion yuan last year, said one of the people, citing audited figures.
Honor sells smartphones through its own websites and third-party retailers in China where it competes with Xiaomi, Oppo and vivo in the market for lower-priced handsets. It also sells its phones in Southeast Asia and Europe. Honor-brand smartphones made up 26% of the 51.7 million handsets Huawei shipped in July-September, estimates from researcher Canalys showed. Huawei is expected to ship 180m smartphones in 2020, so the sale alone would cut Huawei’s annual volume to 115m.
Huawei plans to sell budget-brand smartphone unit Honor in a 100 billion yuan ($15.2 billion) deal to a consortium led by handset distributor Digital China and the government of its home town of Shenzhen, people with knowledge of the matter told Reuters. The sale also indicates little expectation for any swift change in the U.S. perception of Huawei as a security risk following a new U.S. administration. The all-cash sale will include almost all assets including brand, research & development capabilities and supply chain management. Huawei could announce it as early as this week. Main Honor distributor Digital China Group Co Ltd will become a top-two shareholder of sold-off entity Honor Terminal Co Ltd with a near-15% stake, said two of the people. Honor Terminal was incorporated in April and is fully owned by Huawei, the corporate registry showed. Digital China, which also partners Huawei in businesses such as cloud computing, plans to finance the bulk of the deal with bank loans, the two people said. It will be joined by at least three investment firms backed by the government of financial and technology hub Shenzhen, with each owning 10% to 15%, they said. After the sale, Honor plans to retain most of its management team and 7,000-plus workforce and go public within three years, the people said, declining to be identified due to confidentiality constraints. “The … synergy with potential buyers actually can be Honor’s IoT (Internet of Things) business, which can see potential upside.”
Huawei established Honor in 2013 but the business mostly operates independently. Divestment will mean Honor is no longer subject to Huawei’s U.S. sanctions, analysts said. Honor’s products also include laptops, tablet computers, smart TVs and electronic accessories. With margins thin for lower-end phones, Honor booked about 6 billion yuan in net profit on revenue of around 90 billion yuan last year, said one of the people, citing audited figures.
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