Sony is working with Morgan Stanley and Citigroup as it considers adopting Daniel Loeb's proposal for an initial public offering of its entertainment division, sources said.
Loeb, the founder and chief executive of the New York-based hedge fund Third Point, which owns more than 6 per cent of Sony, is pushing Sony's chief executive, Kazuo Hirai, to sell as much as 20 per cent of the entertainment assets in an IPO. Sony shares closed 2.1 per cent higher at 2,049 yen in Tokyo yesterday.
Hirai said at a conference on Thursday in California that Sony will look closely at Loeb's proposal, though it was premature to speculate on the board's decision. In a letter to Hirai last month, Loeb said that an entertainment IPO would help Sony focus on its unprofitable electronics businesses, boost its stock price and raise cash.
Hideki Yasuda, an analyst at Ace Securities in Tokyo, said: "The formal answer requires a third party, the finance professionals' opinion. Sony can't give a big shareholder an answer that hasn't been properly considered."
Film and financial services earnings have helped Sony counter nine straight annual losses from making TVs. The company's film studio topped the US box office last year with hits such as Skyfall.
Even after recent share price gains, Sony, Japan's largest television maker, has lost almost two-thirds of its market value in the past five years, losing ground in televisions to Samsung and lagging behind Apple in smartphones and tablet computers.
Hirai said: "It's something that needs to be discussed at the board level, and discussed thoroughly."
The electronics business is improving, Hirai said, pointing to the Xperia Z smartphone and saying the coming PlayStation 4 console will target frequent gamers before expanding into non-video game content and services.
"I want to revive the electronics company," Hirai said.
"If you look at the value of the entertainment properties for Sony, it's been a great contributor to the bottom line," he said. "We definitely want to make sure we can continue a successful business in the entertainment space. That is, for me, first and foremost, the top priority."
Loeb's Sony stake was valued at about US$1.1 billion, according to his letter. Loeb, 51, said he would underwrite a rights offering in the entertainment division and buy up as much as US$2 billion of the offering if there was not demand elsewhere.
Sony's shares have more than doubled in Tokyo trading this year.