Sony spin-off plan off agenda but looms over shareholder meet
Third Point’s efforts to restructure Sony likely to be ignored at annual meeting
A proposal by Sony’s top investor to partially spin off the Japanese company’s lucrative entertainment business will be the elephant in the room at an annual shareholders meeting on Thursday.
Daniel Loeb, who heads New York-based hedge fund Third Point, will miss the gathering and those attending will not consider his suggestion, sources familiar with the matter said.
They gave no reason why Loeb would not attend. But he is expected to keep pressing his case with Sony’s board and, if no action is taken, will have the right as a major shareholder to eventually call an extraordinary shareholders’ meeting.
Loeb wants Sony to spin off as much as one-fifth of the electronics empire’s profitable entertainment unit and use the proceeds to strengthen its struggling hardware division.
His suggestion, likely to stay on the radar for months, strikes at the heart of whether Sony remains both a consumer electronics maker and a provider of music, movies and TV programmes.
Sony’s strategy to merge content and hardware in a unified company, which kicked off 24 years ago with the purchase of Columbia Pictures, has failed to deliver the synergies it promised, Loeb argued this week in his second letter addressed to Sony CEO Kazuo Hirai.
Loeb’s call to awaken Sony’s “sleeping giant” - an entertainment business that generates 37 per cent of its operating profit with popular artists such as Beyonce and hit franchises like “Spider Man” - may be compelling for shareholders but the company board is unlikely to reach a decision quickly, analysts have said.