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article imageU.S. hedge fund billionaire suggests Sony Corporation break apart

By Michael Krebs     Jun 3, 2013 in Business
U.S. hedge fund billionaire Daniel Loeb is suggesting that Sony Corporation break up its different divisions; however Sony's CEO remains committed to "Sonyness."
U.S. hedge fund billionaire Daniel Loeb, founder and chief executive of Third Point, LLC, has a proposal for Sony Corporation's board: break up the company to un-tether the highly-profitable music and movie divisions from the electronics division's overall drag.
Loeb, who owns roughly 6 percent of Sony's stock through Third Point, according to a Wall Street Journal report, insists the move would benefit investors by unlocking the upward potential from Sony's entertainment practice. Sony's music division has nurtured an impressive portfolio, including Alicia Keys and Taylor Swift, and its movie group has delivered some notable titles for the summer - including "After Earth," "White House Down," and "The Smurfs 2."
Loeb's proposal appears to have caught the attention of Sony's CEO Kazuo Hirai and of Sony's board of directors. While Hirai detailed his commitment to "Sonyness" at the All Things D conference, as Time magazine reported, Sony is believed to have hired outside financial advisors to look at the prospect of a break up more closely.
Bloomberg reported that Sony has hired Morgan Stanley and Citigroup to further consider the Loeb plan.
As a conglomerate, Sony's has struggled against more nimble competitors in the electronics space, and, given this, Loeb's proposal is not that outlandish. However, unlike American public companies where shareholder activism is common, it is unusual for Japanese firms to be confronted in this manner - particularly from a foreign investor like Loeb.
“It’s unlikely that Sony will accept the proposal,” Seiichi Suzuki, market analyst at Tokai Tokyo Securities, told Raw Story. “This is not the first time Sony has faced a shareholder who said ‘your electronics segment is not profitable so you should try to make money in other areas’.”
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