Sony, the Japanese electronics and entertainment giant, is facing an audacious breakup attempt in a battle that could rock the staid Japanese corporate world.
The US hedge fund billionaire Daniel Loeb has amassed a 6.5% stake in the $18.5bn (£11bn) group and is calling for it to be broken up. Renowned for stirring up huge fights with US companies, Loeb wants Sony to spin off part of its entertainment arm, which owns one of Hollywood's largest film studios, behind the latest James Bond movie, Skyfall, and one of the biggest music labels in the world, behind artists such as Taylor Swift. But Sony said on Tuesday morning that its entertainment businesses were "not for sale".
The New York Times reported that Loeb, who founded the hedge fund Third Point, flew to Tokyo last weekend for three days of meetings with government officials, regulators and senior Sony executives, citing people briefed on the matter. He is said to have hand-delivered a letter to the Sony chief executive, Kazuo Hirai, on Tuesday that praises a turnaround effort but asks for more.
Loeb said that Third Point would put up ¥150bn-¥200bn (£978m-£1.3bn) to support an IPO of the group's entertainment operations. The hedge fund recommends that Sony then sell a 15%-20% stake in that business in an offering to existing shareholders.
Separately, it proposed that the company should consider selling off its 60% stake in Sony Financial, which sells life insurance policies and has real estate holdings. That would leave the core electronics arm, which includes Sony's TV and PlayStation units.
Loeb said that would generate funds to invest in the electronics business and allow the company to reduce its debt pile. Third Point thinks this strategy could drive Sony's share price up by as much as 60%, "if implemented properly".
Sony's share price has plunged by nearly 85% over the past 13 years, as it has been overtaken in electronics by the likes of Apple, Samsung and LG.
The approach represents a bet by Loeb that Japan can recover after a decade of minimal growth. Loeb has come out in support of the Japanese prime minister, Shinzo Abe, who is pushing policies to attract private investment. In his letter to Sony, Loeb wrote: "Under Prime Minister Abe's leadership, Japan can regain its position as one of the world's pre-eminent economic powerhouses and manufacturing engines."
In one of his most famous corporate spats, Loeb successfully ousted Yahoo's former chief executive and poached Marissa Mayer from Google to run the internet company.
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