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Sony knocks back Loeb’s partial sell-off of entertainment business plan

By | Published on Tuesday 6 August 2013

Sony Corp

As expected, Sony Corp has rejected proposals from one of its shareholders to sell off a slice of its US-headquartered entertainment business, to generate cash to help fund the revival of the Japanese conglom’s flagging consumer electronics operations, and to force the firm’s music, movie and TV companies to be more transparent to shareholders.

The Sony top guard have long denied recurrent rumours that a sale of its entertainment assets is on the agenda, though when Daniel Loeb, whose Third Point hedge fund now controls just under 7% of Sony stock, proposed the partial sell-off (to float 20%), Sony chief Kazuo Hirai said it was an “important proposal” that his board would fully consider.

But support for the idea within Sony HQ, and amongst some other key shareholders, was never high, and in a statement earlier today the firm said its board was unanimous in its decision to knock back the Loeb plan, adding that 100% ownership of its entertainment businesses was “fundamental” to the success of the wider Sony business.

Hirai says: “Sony’s entertainment businesses are critical to our corporate strategy and will be important drivers of growth. I am firmly committed to assuring their growth, to improving their profitability, and to aggressively leveraging their collaboration with our electronics and service businesses”.

Noting that part of Loeb’s plan was about forcing more transparency in the affairs of the Sony music and movie firms, Hirai did also commit to make additional disclosures about the operations of those businesses to investors moving forward.

Loeb said he was “disappointed” with the decision, and would “explore further options to create value for Sony shareholders”.

Read Kazuo Hirai’s full letter to Daniel Loeb here