The United States has changed at the end of its president, but we do not know if its policy will also change with respect to Huawei Technologies Co Ltd and the imposition of restrictions that captured the world’s attention for much of the technological, and even political, news of 2019. For this reason, Huawei has made a drastic decision: to sell its mobile phone subsidiary Honor in order to be able to ‘save’ the Honor brand and not to fall due to the change in Huawei.
Huawei will sell the smartphone subsidiary Honor
These plans are not official yet, but have been uncovered by the Reuters information agency, which has had “several sources with knowledge of the situation.” The sale plans follow the imposition of US restrictions on the supply of Huawei products, plans that force the second largest smartphone maker in the world after South Korea’s Samsung to “focus on high-end phones and business-oriented to the companies ”, according to the sources.
In this new reality of Huawei, the mobile phones of the Honor subsidiary would not have a place, since they are terminals designed for the economic and mid-range smartphone market. Honor’s sale will be in cash and will include nearly all of its assets, including branding, research and development capabilities and supply chain management, the sources said. In fact, Huawei could announce it as early as Sunday.
Honor for a Chinese consortium
Honor mobiles are very popular, and it is clear that the recognition and success of the brand must be paid for. Therefore, Reuters points out that Huawei will sell Honor for 100,000 million yuan, which is about 12,737 million euros at the exchange. A high-end sale operation that only a few could afford, in this case the Honor buyer will be a consortium led by mobile phone distributor Digital China and the government of his hometown of Shenzhen.
In this way, Honor’s main distributor, Digital China Group Co. Ltd., will become one of the two main shareholders of Honor Terminal Co. Ltd., with a stake of close to 15%, said two of the sources. Honor Terminal is currently 100% owned by Huawei, according to commercial records.
Digital China, which is also Huawei’s partner in businesses like cloud computing, plans to fund most of the deal with bank loans. At least 3 government-backed investment firms from Shenzhen financial and technology center will join, each of which will have 10-15% Honor.
After the sale, Honor plans to retain most of its management team and its staff of more than 7,000 workers, and go public within 3 years, as noted by sources, who “asked not to be identified due to limitations of confidentiality ”. At the moment neither Honor nor Huawei, Digital China or the Shenzhen government have commented, so we can only wait to see if the sale actually takes place.