Following weeks of rumors, troubled electronics firm Sony has finally confirmed the sale of its US headquarters located in Madison Avenue, New York. The building was sold to the Chetrit Group real estate consortium, fetching a cool $1.1 billion for the Japanese firm.
Sony said that it hoped to complete the transaction by the end of March this year, announcing that as part of the deal it would remain in the building alongside other tenants for up to three years in a leaseback arrangement with Chetrit Group.
Sony’s decision to sell its largest US asset is no surprise, given its highly publicized struggles over the last few years. Together with rival Japanese firms Panasonic and Sharp, Sony has suffered badly in recent years from sluggish TV sales and increased competition from companies like Samsung Electronics in Korea, which is now the largest TV manufacturer in the world.
The latest deal should at least prove to be a fairly profitable one for the organization. According to Sony, the transaction should net it some $770 million in hard cash after paying off debts related to the Madison Avenue HQ.
“Sony is undertaking a range of initiatives to strengthen its financial foundation and business competitiveness and for future growth,” said a spokesperson for Sony.
“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.”
Sony has been based in the 37-storey building since buying it outright in 2002. At that time the company was flush with cash of course, but the last four years have seen the company’s fortunes have taken a sharp turn for the worse. According to Yahoo Finance, the Bravia TV and PlayStation maker lost a whopping $5 billion in its last fiscal year, the fourth consecutive year that it has reported such huge losses – and this comes in spite of the sale of its chemical division last year.
The restructuring effort is set to gather pace in the next few months. Late last year, Sony announced that it plans to shed about 10,000 jobs worldwide in 2013, and would spend around $1 billion on a massive restructuring effort aimed at reducing production line costs. In addition, the firm may even decide to sell of its main Tokyo headquarters, located in that city’s expensive Osaki district, for an estimated $1.5 billion.
On a brighter note, the sale of its Madison Avenue HQ at least had a positive impact on the company’s share price. Sony stocks rose by 6.73% on hearing the news this morning in Tokyo, following on from a 5.67% gain the day before.