Huawei reportedly agrees to sell Honor for £11.5 billion

The smartphone giant is said to have struck a deal with the Shenzhen government and Digital China

The front and back of an Honor smartphone

Huawei is reportedly planning to sell off its Honor smartphone business unit to a consortium led by  distributor Digital China and the Shenzhen government in a deal worth 100 billion yuan (£11.5 billion).

The news comes weeks after rumours of the sale started circulating, with Reuters estimating the deal at up to 25 billion yuan (£2.9 billion). However, new reports claim that the transaction will bring Huawei three times as much profit.

Reuters reported, citing people with knowledge of the matter, that the sale will be all-cash and will include almost all Honor assets including brand, research & development capabilities, as well as supply chain management

One source told the publication that Huawei might announce the acquisition at the end of this week.

According to two sources, Honor’s main distributor and Huawei’s cloud computing partner, Digital China Group, will become a top-two shareholder with a stake of around 15%, following talks conducted with Huawei last month.

Digital China is expected to be joined by at least three investment firms backed by the government of Shenzhen, where Huawei is headquartered, with each owning 10% to 15%.

Following the sale, Honor is expected to retain most of its management team and 7,000-plus employees. Sources also believe that the unit will go public within the next three years.

Meanwhile, with its budget-smartphone unit sold off, Huawei will reportedly focus on offering higher-end devices tailored to corporate clients. Out of Huawei’s 70-80 billion yuan revenue in 2019, Honor was only responsible for less than 5 billion yuan in net profit.

The move to sell the business unit could also be influenced by the ongoing trade war with the United States, with Huawei having been hit with sanctions by the Trump administration. One of the sources told Reuters that the decision to sell off Honor signifies little expectation for any swift change in the US perception of Huawei as a security risk, despite President Donald Trump losing his bid for reelection.

IT Pro has reached out to Huawei for comment but has not received a response at the time of publication.

Featured Resources

Four cyber security essentials that your board of directors wants to know

The insights to help you deliver what they need

Download now

Data: A resource much too valuable to leave unprotected

Protect your data to protect your company

Download now

Improving cyber security for remote working

13 recommendations for security from any location

Download now

Why CEOS should care about the move to SAP S/4HANA

And how they can accelerate business value

Download now

Most Popular

46 million Animal Jam accounts leaked after comms software breach
Security

46 million Animal Jam accounts leaked after comms software breach

13 Nov 2020
macOS Big Sur is bricking some older MacBooks
operating systems

macOS Big Sur is bricking some older MacBooks

16 Nov 2020
Huawei Mate 40 Pro 5G review: A tragically brilliant Mate
Mobile Phones

Huawei Mate 40 Pro 5G review: A tragically brilliant Mate

26 Nov 2020