US investor makes ambitious Sony break-up call

US investor makes ambitious Sony break-up call
Craig Chapple

By Craig Chapple

May 14th 2013 at 11:25AM

Daniel Loeb calls for company to spin off part of its entertainment division

A hedge fund manager with stake in Sony has made an ambitious call for the break-up of electronics giant Sony.

As reported by The New York Times, people “briefed on the matter” said that Third Point founder Daniel Loeb is calling for the company to spin off part of its entertainment and insurance arms.

The entertainment arm currently includes their film and music label, responsible for movies such as Skyfall and music artists including Taylor Swift. Sony’s electronics division, which houses its PlayStation operations, would remain unaffected.

Loeb’s Hedge Fund currently owns a 6.5 per cent stake in Sony, with its shares valued at $1.1 billion.

It is believed the billionaire recently visited senior Sony execs and government officials for three days, praising Kaz Hiari’s efforts to reverse the company’s fortunes while also asking for a complete reorganisation of the firm.

In a letter, Loeb is said to have suggested handing 15-to-20 per cent of Sony Entertainment to existing shareholders, and that Third Point would be willing to front up to $2 billion to help launch an initial public offering of that division.

Loeb also recommended the electronics giant sell of its 60 per cent stake in Sony Financial, which sells life insurance properties, in an effort to focus on a few core products, including its PlayStation operations.

The hedge fund manager said this would help Sony reduce much of its debt and also raise shares by around 60 per cent.

Sony spokesperson Shiro Kambe said however that while it welcomes investment and would pursue 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 revitalise and grow the electronics business, while further strengthening the stable business foundations of the entertainment and financial services businesses,” he said.

Although incredibly amibitious in his plans to break up Sony, Loeb is said to be known for ruffling feathers in the corporate world, at least in the US, having previously replaced Yahoo's former chief exec with Google's Marissa Mayer.