Billionaire Hedge Fund Manager Encourages Sony to Spin Off Entertainment, Sell Insurance Divisions

An interesting story in the New York Times (as unearthed by Develop) reveals that a hedge fund manager that controls billions in investment in Sony has suggested that the company break up parts of the company.

According to the NYT, Third Point founder Daniel Loeb is calling for Sony to spin off part of its entertainment and insurance arms. The entertainment arm referred to in the story does not include Sony's game divisions (PlayStation, SOE, etc.) but rather its film and music label. Loeb’s Hedge Fund currently holds a 6.5 percent stake in Sony, with its shares valued at somewhere in the neighborhood of $1.1 billion.

The NYT story goes on to say that Loeb recently visited senior Sony execs and government officials for three days, "praising Kaz Hiari’s efforts" to reverse the company’s fortunes but also asking the company for a complete reorganization. The NYT also claims that Loeb sent a letter to Sony suggesting that the company should hand over 15 to 20 percent of Sony Entertainment to existing shareholders, and that Third Point would be willing to put up to $2 billion to help launch an initial public offering of a new division.

Loeb also supposedly recommended Sony unload its 60 percent stake in its insurance arm, Sony Financial, so it can focus on its core products. Loeb said this would help Sony reduce a lot of its current debt and raise share prices by around 60 percent.

Sony spokesperson Shiro Kambe told the NYT that it welcomed investment and didn't mind constructive dialogue with shareholders on company strategy, Sony Entertainment was not for sale.

"We are focused on creating shareholder value by executing on our plan to revitalize and grow the electronics business, while further strengthening the stable business foundations of the entertainment and financial services businesses," he told the NYT.

Source: New York Times by way of Develop



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