Sony Rejects Loeb's Proposal To Split Off Entertainment Division
Billionaire hedge fund investor Daniel S. Loeb wanted Sony to split their business, and make their entertainment division (which includes the PlayStation brand, of course) a wholly separate endeavor.
But after some consideration, the electronics giant has opted to reject Loeb's proposal. In a lengthy letter to Loeb's Third Point LLC firm, Sony explained why continuing to own 100% of the entertainment business is "fundamental" to the corporation's success.
They gave numerous reasons: Firstly, Sony believes that Third Point's plan for an initial public offering of Sony's entertainment ventures is "not consistent with the company's strategy for achieving sustained growth in profitability and shareholder value." They also said that with increased demand of entertainment content, their business will "increasingly benefit from these trends" and that the shareholders will benefit as well. Sony further said they need full control of their entertainment branch because that "drives internal collaboration, facilitates synergies, and allows the company to be more nimble."
Said Sony CEO and president Kaz Hirai:
"We are encouraged by our progress as we continue to execute on our One Sony strategy," Sony CEO and president Kazuo Hirai said in a statement. "We have made many changes during my tenure as CEO, and we are confident that we are on the right path.
Sony's entertainment businesses are critical to our corporate strategy and will be important drivers of growth, and I am firmly committed to assuring their growth, to improving their profitability, and to aggressively leveraging their collaboration with our electronics and service businesses. We are determined to pursue sustained growth in profitability and shareholder value, so that we can meet and exceed the expectations of all of our stakeholders."
Well, guess Loeb will just have to be happy with owning 6% of Sony. It's worth about $1.1 billion so no soup lines in his future.
8/6/2013 10:24:50 AM Ben Dutka