Sony mulls spin off proposal

Sony mulls spin off proposal
Seth Tipps

By Seth Tipps

May 23rd 2013 at 8:20AM

Executives consider dividing company's entertainment assets for new IPO

Sony is considering a proposal by billionaire Daniel Loeb to spin off its entertainment assets, says Chief Executive Officer Kazuo Hirai.

According to Bloomberg, the proposoal would partially divide the company's more valuable portions for the purpose of offering a new, more valuable IPO.

“It’s only a start,” said Sony CEO Kazuo Hirai.

“It’s important that the board will discuss this and come to a decision that represents Sony’s stance.”

This is just a week after the company said the assets weren't for sale.

Hirai did not provide a timeline for a response, and declined to give his opinion on the proposal.

Sony shares spiked in the hours after Microsoft unveiled its next generation console, the Xbox One, but the news has brought suggestions that there may be more to this success than uncertainty about its competition.

Not everyone is equally enthusiastic about the proposal.

While claiming that expectations the company could take action are driving stock prices higher, Iwai Cosmo Holdings analyst Mitsuo Shimizu says it’s not clear the spin off would actually strengthen Sony.

Sony itself might be the proposal's biggest skeptic, and Atlantis Investment Research president Edwin Memer says the company will do whatever it can to hold on to its entertainment business.

“Sony will consider how to keep control of the company and may be forced to throw a bone to prevent a long, ugly fight,” said Merner.

“They will try to give up as little as possible and are no doubt receiving advice on how to fight off the aggressor.”