Sony rejects Loeb's proposal to spin off entertainment unit
By Mari Saito
TOKYO (Reuters) - Japan's Sony Corp on Tuesday rejected a proposal from activist shareholder Daniel Loeb to partially spin off its entertainment business but the billionaire investor vowed to keep talking with the company and to explore other options.
Sony said it could still squeeze synergies from its decades-old marriage of content and hardware and promised more disclosure in its entertainment operations.
Loeb's Third Point LLC hedge fund has waged a three-month campaign to convince the company to sell as much as one-fifth of its money-making entertainment arm - movies, TV and music - to free up cash to revive the electronics business.
"Sony's board of directors has unanimously concluded that continuing to own 100 percent of our entertainment business is the best path forward and is integral to Sony's strategy," Sony CEO Kazuo Hirai said in a letter to Loeb, which was released by the company.
Loeb had cast his proposal for a public offering of part of Sony's entertainment business as consistent with Prime Minister Shinzo Abe's drive to boost economic growth through structural reform in Japan.
But a source familiar with the discussions said Sony's decision reflected worries about listing a subsidiary, not resistance to corporate reform in Japan.
The company did not need the cash from a subsidiary IPO, which would have created possible conflicts and cumbersome requirements from such a listing, he added.
"I can't believe this is a statement on Japanese companies not being willing to be flexible," said the source. Continued...