Sony Corp said on Tuesday it will turn its listed financial arm, Sony Financial Holdings Inc, into a wholly owned unit through a tender offer worth about 400 billion yen ($3.72 billion).

The deal will allow the Japanese electronics and entertainment giant to strengthen its presence in the fintech field to compete with global tech majors such as Alibaba Group Holding Ltd and Apple Inc.

It also reflects Chief Executive Kenichiro Yoshida’s strategy of making revenue streams more stable following a major revamp by his predecessor which shifted Sony’s focus away from low-margin consumer electronics to entertainment content and subscription-based businesses.

The deal is the biggest strategic move for Sony under Yoshida since a $2.3 billion acquisition of EMI Music Publishing, announced soon after Yoshida took the helm in 2018.

“The financial business has a stable profit base in Japan,” Yoshida told reporters and analysts in a briefing. Taking full control of the business “will help us hedge growing geopolitical risks.”

Sony, which will change its name to Sony Group next year, already owns 65% of Sony Financial. It offers about 2,600 yen for each remaining Sony Financial share – a premium of about 26% over Monday’s closing price of 2,064 yen. The tender offer closes in July.

Sony Financial, a consistently stable revenue source for Sony, has banking, life and non-life insurance, credit card and nursing care businesses in Japan with about 11,000 staff. Total assets stood at 14.5 trillion yen as of the end of last year.

It contributed operating profit of 129.6 billion yen in the year ended in March, or about 15% of the group.

Sony expects the acquisition to have a positive tax-related impact of 40 billion to 50 billion yen annually on net profit.

The plan, first reported by the Nikkei business daily earlier on Tuesday, sent shares of Sony Financial up nearly 17% to 2,412 yen before trading of the stock was suspended. Sony Corp shares rose 3.3% in a broader market that ended up 1.5%.

($1 = 107.4000 yen)

Topics Japan