Huawei has reportedly finalized a buyer for Honor’s smartphone business
Huawei has been in a tight spot ever since it was placed on the US Commerce Department’s “Entity List” last year. And while the company has made several efforts to survive against all odds, things have come to a point where it’s looking to sell part of its subsidiary, Honor, to stay afloat. Last month we learned that Huawei was in talks with several suitors like Digital China Group, TCL, and Xiaomi, to sell part of Honor’s smartphone business. It seems like the company has now finally narrowed down to a buyer and to a deal.
As per a recent report from Reuters, Huawei plans to sell Honor to a consortium led by Digital China and the government of Shenzhen for CNY 100 billion (~$15.2 billion). Sources familiar with the details have revealed that the all-cash deal will include all of Honor’s assets, including brand, R&D capabilities, and supply chain management. Huawei is expected to officially announce the deal as early as Sunday.
Following the transaction, Digital China Group will become a top-two shareholder of Honor Terminal Co Ltd with close to a 15% stake. The sources further revealed that Digital China plans to finance the bulk of the deal with bank loans and it will be joined by at least three investment firms, each owning a 10%-15% stake, backed by the government of Shenzhen. Honor plans to retain most of its management team and 7,000-plus workforce after the sale and go public within three years, the sources added.
As of now, none of the involved parties have officially released a statement on the matter. We expect to learn more about the specifics when Huawei officially announces the deal later this month.
Selling off Honor is expected to help Huawei recoup some of the associated costs, while also allowing Honor to dissociate from the US sanctions. It will also help Huawei redirect all of its focus to high-end smartphones and corporate-oriented businesses.