TOKYO - The U.S. hedge fund manager renowned for shaking up Yahoo Inc. has set his sights on Sony Corp., proposing that the Japanese electronics giant spin off up to 20 percent of its movie, TV and music division and use the money to strengthen its ailing device manufacturing unit. Sony rejected the plan, but analysts latched onto the idea as a way for Sony to unlock hidden value.
Sony's U.S.-traded shares closed up $1.87, or 9.9 percent, at $20.76 on Tuesday after hitting a 52-week high of $22.22 earlier in the day.
In a Tuesday letter to Sony President Kazuo Hirai, first published in The New York Times, Third Point LLC CEO Daniel Loeb suggests Sony take 15 to 20 percent of the entertainment unit public by offering current Sony shareholders the opportunity to buy shares in it.
In this Feb. 7 photo, Sony signs hang from a store in Tokyo. A U.S. hedge fund has proposed that Sony Corp. selling up to 20 percent of its entertainment business to use that money to strengthen its ailing electronics unit. In a Wednesday letter to Sony President Kazuo Hirai, first published in The New York Times, Daniel Loeb, chief executive of hedge fund Third Point, suggested Sony take 15 percent to 20 percent of the entertainment unit public.
Loeb said that would allow the Japanese maker of PlayStation game machines and Bravia TV sets to fund improvements to its battered electronics operations and provide existing shareholders with a way to own one of Sony's most profitable businesses more directly.
Sony replied in a statement Tuesday that its entertainment business is not for sale, and stressed it is trying to strengthen both that division and its electronics operations.
"As president and CEO Kazuo Hirai has said repeatedly, the entertainment businesses are important contributors to Sony's growth and are not for sale," Sony said. "We look forward to continuing constructive dialogue with our shareholders as we pursue our strategy."
Despite Sony's rebuff, analysts hailed the idea.
Pivotal Research Group analyst Brian Wieser said that becoming a separate company would allow Sony's entertainment division to grow and become more profitable. It would also focus investor attention on its assets, which would take on new value as a potential acquisition target for media companies like CBS Corp.
CBS spokesman Dana McClintock declined to comment on what he called "rumor and speculation." Besides distributing blockbuster movies like the James Bond hit "Skyfall," Sony's entertainment arm makes popular TV shows such as "Community" for NBC and "Breaking Bad" for AMC. Notable Sony Music artists include Beyonce, Adele, Bob Dylan and Kenny Chesney. Sony operates 124 pay TV channels in more than 159 countries.