Sony Rejects Plan to Spin Off Entertainment Into Separate Division

August 6, 2013 -

The Sony board has rejected a proposal by Third Point LLC CEO Daniel Loeb - one of Sony's largest investors - that would have spun off 20 percent of its entertainment divisions into a separate entity. The board's rejection of the idea was unanimous. A letter to Third Point from Sony expressed that the company sees value in owning entertainment content in this connected, digital age. Sony also told Third Point in its letter that maintaining total ownership of its divisions encourages "internal collaboration and efficiency."

"In addition, Sony's Board and management believe it has adequate capital resources to fund its business plans," the letter read. "Should Sony require capital, or in the event of unanticipated events, the company's priority would be to raise capital without selling a portion of an asset fundamental to the growth strategy, and without unnecessarily burdening Sony's ability to execute its business strategy for both entertainment and electronics."

"We are encouraged by our progress as we continue to execute on our One Sony strategy," added Sony CEO Kazuo Hirai. "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."

Way back in May, Loeb pointed out that Sony's electronics and entertainment divisions were being obscured by the side-by-side operation structure within the company. He proposed an IPO for an entertainment division and promised to raise cash in order to do it.

Sony took awhile to consider the idea, but ultimately thought better of it, instead sticking with the structure the company has had for quite some time...

Source: GII

 


 
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