TOKYO -- Sony announced Tuesday it will acquire an additional stake in DH Publishing, the operator of EMI Music Publishing, which owns the copyrights for popular artists such as the U.K. rock band Queen. DH Publishing will become a 100%-owned consolidated subsidiary, and EMI Music will be about 90% owned by Sony.
Sony will acquire a 60% stake for $1.9 billion from the Abu Dhabi-backed Mubadala Investment Company. Sony will pay another $400 million to shareholders, management and employees as part of the deal, it said. It will be Sony's second-largest acquisition ever, after Columbia Pictures in 1989.
Sony will also take on EMI's gross existing debt totaling about $1.359 billion.
Sony already holds a 40% stake in DH Publishing, with the remainder owned by the Mubadala-led fund.
Sony expects the acquisition to add $100 billion to its operating profit for the fiscal year ending March 2019.
EMI's revenue for fiscal year ended March 2018 was $663 million, and its operating profit was $127 million.
EMI owns the copyrights for about 2.1 million songs, including major hits and movie music. The acquisition makes Sony "one of the world's largest music publishers," CEO Kenichiro Yoshida said at a news conference on Tuesday. "The basic strategy here is to strengthen the content [intellectual property]."
He said strengthening Sony's content portfolio will be a key strategy in movies, television and anime. Last week, Sony announced that its music unit, Sony Music Entertainment, had agreed to buy a stake in the company that owns the iconic Peanuts franchise for $185 million.
Also Tuesday, Sony announced its first mid-term business plan under Yoshida, who took over as CEO in April. The plan for the three years ending March 2021 will aim for operating cash flow of 2 trillion yen or more, excluding the financial services segment.
The company plans to allocate 1 trillion yen ($9 billion) on capital expenditures, with the rest to be spent on strategic areas, including content, as well as on shareholder returns.
The company's focus on content comes at a time when sales of hardware, such as gaming devices and smartphones, are declining. The company sold 19 million units of its Playstation 4 console in the fiscal year ended March, a drop of 5% from the previous year. Smartphone sales fell 7.5%.
The company expects revenue from both the gaming and mobile divisions to fall in the current fiscal year as well.
"I recognize that it is an issue," Yoshida said of the weak performance of the mobile division.
Still, Sony said it expects to generate consistent cash flow from its "Branded Hardware" -- a term that refers to hardware such as smartphones, TVs and cameras that bear the Sony brand -- by targeting the premium market segment over volume sales.
Nikkei Staff Writer Akihide Anzai contributed to this report