In our mid-term corporate strategy plan announced on September 22, 2005, Sony stated: “In our retail businesses, we will explore strategic alternatives to maximize the value of the assets, including alliances with relevant partners.” Since then we have been examining various options in this regard. Sony can now announce the formation of a holding company to cover its group of retail businesses and that Nikko Principal Investments Japan Ltd. has been selected as a financial partner of the holding company with 51% of the holding company's stock to be transferred to Nikko Principal Investments Japan Ltd. Sony and Nikko Principal Investments Japan Ltd. have reached a basic agreement to this effect. The aim of the new holding company will be to create an independent business base whereby the value of the retail businesses can be maximized.
The retail businesses concerned are: Sony Plaza Co., Ltd., Sony Family Club, Inc., B&C Laboratories Inc. (including CP Cosmetics Inc.), Maxim's de Paris Corporation, and Lifeneo Inc. These businesses span a wide range of retail activities including sale of imported goods, mail order business, cosmetics and restaurants. Their retail experience has allowed them to develop strong brands, high customer traffic and a set of unique products and services.
The retail industry is in a phase of fierce price competition and structural transition. While this climate is severe, there are also real business opportunities as customer needs and preferences change. In order to grasp these opportunities, we believe that this new configuration of our retail businesses will maximize each company's originality and strength and offer customers integrated offerings to meet their needs.
By entering into this partnership, Nikko Principal Investments Japan Ltd. has expressed its high evaluation of our retail businesses. Sony believes that through this agreement it has secured the ideal financial partner to create the businesses opportunities that will drive the growth of this group of retail businesses.
In order to support the independence of this retail business group Sony plans to gradually reduce its stake in the holding company.
Sony will now enter into a final period of consultation with Nikko Principal Investments Japan Ltd. with a view to transferring the 51% of the holding company stock to Nikko Principal Investments Japan Ltd. by the end of the first quarter of fiscal year 2006.