US hedge fund Third Point urges IPO for Sony entertainment business
14 May 2013
After amassing a stake of around 6.5 per cent in Sony Corp, US hedge fund Third Point has urged the board of the electronics and entertainment giant to spin off its movie and music division.
The New York Times today reported that activist hedge fund billionaire Daniel Loeb, who played a crucial role in getting Marissa Mayer to leave Google and head Yahoo, flew to Tokyo this week to hand deliver a letter to Sony CEO Kazuo Hirai, urging the company to take public 15 -20 per cent of its entertainment unit, comprising of its movie and music businesses.
Sony, which owns one of Hollywood's largest film studios, behind the latest James Bond movie, Skyfall, and one of the biggest music labels in the world, behind artists such as Taylor Swift, today said that its entertainment businesses were not for sale.
Although Sony Entertainment accounts for almost half of Sony's $18.5 billion market value, Loeb estimates that a partial spin-off of the entertainment business could boost Sony's share price by as much as 60 per cent.
Loeb said that Third Point, which holds $1.1 billion worth of Sony shares, said it can underwrite a rights issue for as much as $1.5 billion - $2 billion.
While Sony's flagship television business posted nine straight years of losses, the entertainment and financial divisions are the main profit drivers for the company accounting for 37 per cent and 63 per cent of its profits respectively.
Last week Sony reported its first net profit in five years, despite its television business remained in the red, having lost out to South Korea's Samsung and LG.