On Tuesday, the global electronics manufacturer Sony revealed that it plans to buy Bertelsmann’s’ 50% stake in their Sony BMG joint venture. The news was greeted by a rise in Sony shares at the Tokyo stock market. Sony has agreed to pay around $900 million to Bertelsmann for its fifty percent stake in the joint music company.

On the morning of August 6, the Tokyo stock market opened with anticipation at Sony’s latest deal. By mid-morning Sony shares were trading at 3.7 percent higher and had even outdone the 2.7% rise of the Tokyo stock market index or IELEC.

Sony BMG is the world’s second largest music company and comes only after Universal which is a unit of Vivendi. Post-takeover, the company will be called Sony Music Entertainment and After being approved by the regulatory authorities in the US, it will become a fully-owned subsidiary of Sony Corporation of America.

In a message to its clients, Goldmann-Sachs maintained that despite restructuring costs of around $140 million in the current year, Sony BMG still had the potential for medium-term profit growth. However other analysts seemed surprised at Sony’s move, considering the falling sales of recorded music all over the world which according to an industry body slided by 8% in 2007.

-Kalyani Mookherji