17 November 2020
Huawei is reportedly ready to sell its Honor business to Digital China Group for an estimated value of 100 billion Yuan i.e about $15 billion. The report is coming from Reuters which also broke the news about the company's intentions to make the sale. Digital China Group is said to be a consortium including Digital China and the local government of Shenzhen.
The deal includes all of Honor's business assets including research and development, supply chain management, and brand. This is in contrast to previous rumors that only some parts of the business will be sold. It is said to be an all-cash deal with an official confirmation expected as early as the coming Sunday i.e. November 15th.
Digital China Group will own a 15% stake in Honor that will make it a top-two shareholder in the company. Digital China is said to be considering financing the majority of the deal for Huawei. It will be working with at least three government-backed investment firms to make the deal happen. These firms will get about 10% to 15% ownership in the company once the deal is done.
For the uninitiated ones, Honor is a subsidiary of Huawei and is currently fully-owned by it. It is one of the well-known smartphone brands, especially in the budget and mid-range segment. It was doing well in the market until the U.S. government imposed a trade ban prohibiting US-based companies from working with it. This is the reason it was releasing phones without any of the Google apps and services, an integral part of any Android device if it wants to become a commercial success. The deal would help Honor to bypass the ban and it will be able to sell phones like normal.