Japanese Sony Corporation rejected a proposal from activist shareholder Daniel Loeb to partially turn off its entertainment business, the billionaire investor, however, promised to keep negotiating with the company and to explore other options.
Sony argued that the action could still constrict 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 remunerated a three-month campaign to convince the company to sell one-fifth of its money-making entertainment arm which consist of movies, TV and music, to facilitate money for reviving of 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 the country.
The millionaire, who owns around 7 percent of Sony through shares and cash-settled swaps, said he was disappointed with the decision, even while acknowledging that Sony was showing a greater commitment to transparency.
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.
“Third Point looks forward to an ongoing dialogue with management and intends to explore further options to create value for Sony shareholders,” Said Third Point.
Sony’s shares fell 4.6 percent on Tuesday but are still more than double their value at the start of the year, boosted by Loeb’s calls for reform at the company and by the prime minister’s reflationary “Abenomics” policies.