Sony Corp shares fell almost 5% after the company rejected stake-holder Daniel Loeb’s proposal to spin-off part of its entertainment business.
The call for Sony to drop some of its entertainment arm, including music, came from hedge-fund investor Loeb – whose Third Point LLC owned around 6.5% of Sony stock – in May.
Loeb renewed his calls in June after Third Point increased its stake in Sony to 6.9% to reach a total of 70m shares and bolstering its position as one of the company’s largest stakeholders.
In response to the calls, Sony Corp CEO Kaz Hirai said that the company would examine the notion “from all angles”.
‘Under consideration’ was the status of Loeb’s proposal until earlier this week when Hirai issued a public response saying that Sony’s entire film, television and music business was fundamental to its strategy.
“While we share with you the objectives of increasing profitability and driving shareholder value, after careful review, the Sony board of directors has unanimously concluded that continuing to own 100% of our entertainment business is the best path forward,” he said.
Loeb said he was disappointed by the board’s decision but said that Third Point was pleased that “our efforts have brought much needed attention to Sony’s valuable entertainment assets by both management and investors.
“Third Point welcomes Sony’s commitment to greater transparency and expects this will foster a culture of accountability.”
“Sony has clearly recognised the performance issues we identified. In the new spirit of transparency, management should communicate more specific plans to improve entertainment results.
"A renewed focus on profitability and better margins should reduce bureaucracy and thus free up resources to invest in high-quality motion pictures, filmed entertainment, networks and music, aligning shareholder interests, the creative community and consumers.”
Via: The FT