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GE Ends Bid for Sony Life Insurance

June 24, 2002|From Bloomberg News

TOKYO — General Electric Co. dropped out of the race to buy Sony Corp.'s life insurance arm after talks foundered, officials at the Japanese firm said.

The failure opens the way for Dutch insurer Aegon and Prudential Financial Inc. of the U.S. to buy a stake in a company Sony values at as much as $6.4 billion, the officials said. The winner would get a sales network of 4,500 agents in the world's biggest life insurance market.

Sony Chairman Nobuyuki Idei wants to sell Sony Life Insurance Co. to raise cash and focus on returning the company's consumer electronics business to profit. Sony had a group net loss of $45 million in the three months to March 31 as losses widened at its electronics business, which accounts for about 70% of sales.

"We still are looking for potential alliances with foreign insurance companies," said Kei Sakaguchi, a Sony spokesman in Tokyo, declining to name any companies.

Mark Norbom, president of General Electric Japan Ltd., declined to comment. Aegon spokesman Gijsbert Siertsema and Prudential spokeswoman Theresa Miller wouldn't comment.

Sony Life's first-year premiums per agent were the highest in Japan last year, aided by the company's brand name and trained sales agents in an industry used to employing homemakers part time to sell policies to friends and relatives.

The unit also avoided investments in the sagging real estate market made by many rivals, making its assets more attractive.

"GE wanted a majority stake to acquire Sony's excellent sales force," said Tsuyoshi Segawa, an equity strategist at Shinko Securities Co.

"It may be that internal opposition forced Sony to cancel a sale offer, even though it was Sony that sought an alliance with GE."

General Electric took control of Toho Mutual Life Insurance Co. in March 2000 after it failed. The company also controls Saison Life Insurance Co. Aegon has no presence in Japan.

Sony President Kunitake Ando in April denied that the company planned to sell the entire unit after receiving an e-mail from a top insurance salesman saying to do so would betray Akio Morita, the late founder of the world's No. 2 consumer electronics company.

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