Wednesday, November 11, 2020

Sale of Honor by Huawei Almost Completed?

 Huawei reportedly plans to sell Honor smartphone brand units to a consortium led by phone distributors, Digital China and the Shenzhen government.

The matter was revealed by sources who knew more deeply about the planning.

According to the source, the deal is said to be worth about US $ 15.2 billion or 100 billion yuan.

The plan follows US sanctions against Huawei Technologies Co Ltd, forcing the world's second-largest smartphone manufacturer to focus entirely on its smartphone segment and corporate-based businesses.

The agreement involving the sale of cash covers all assets including branding, research and development capabilities as well as supply chain management.

Adding to the source, the plan is likely to be announced by Huawei this Sunday.

Digital China, which also cooperates with Huawei in several businesses such as cloud computing, plans to fund most of the deal through bank loans.

In addition to Digital China, three other financial firms backed by the Shenzhen government will also be involved in the deal with each acquiring a shareholding of 10 to 15%.

"Digital is a major distributor for Honor in China so we think this move will help Honor maintain its influence in China," said Tom Kang, director of research at Counterpoint

Revealing the source further, after the sale is completed, Honor plans to retain most of its management team and 7,000 more of its workforce and will return to the market in the next 3 years.

"The move is seen as drastic because the Honor brand is considered important to Huawei's smartphone portfolio," said Canalys vice-president Nicole Peng.

Add Peng, Internet of Things (IoT) Honor business is a major attraction for buyers.