By Chikafumi Hodo and Nathan Layne
TOKYO (Reuters) - Billionaire hedge fund investor Daniel Loeb on Tuesday called on Sony Corp to spin off its lucrative entertainment arm, setting the stage for a clash between the activist fund and management at the Japanese electronics maker.
Loeb said his Third Point hedge fund had accumulated a little more than 6 percent of Sony's shares - a stake worth $1.1 billion - making it the largest stakeholder in the inventor of the Walkman portable music player and Trinitron TV.
In a letter personally delivered to CEO Kazuo Hirai at Sony's headquarters on Tuesday, Loeb said Third Point was willing to put up another 200 billion yen ($1.97 billion) to support an initial public offering of a 15-20 percent stake in the entertainment arm, which includes one of Hollywood's top film studios and a leading music label.
The $13 billion hedge fund said the move would generate cash to help the company's ailing electronics operations, and could add another 60 percent to Sony's stock price, which has already doubled this year amid a strong rally in Japanese shares.
Loeb set his argument against a backdrop of hope for corporate reform under the leadership of Prime Minister Shinzo Abe, who returned to power in December promising to pull the economy out of a two-decade slump.
"Sony stands at the crossroads of compelling corporate opportunity and massive Japanese economic reform," Loeb wrote in the letter, which was disclosed to the media. Corporate leaders like Hirai, he added, "can spearhead this important growth."
While Sony has sold off real estate and other assets to cover losses on flat TVs and other consumer electronics, it has previously rejected investor calls to spin off Sony Entertainment.
"The entertainment businesses are important contributors to Sony's growth and are not for sale," Sony said in response to Loeb's proposal. "We look forward to continuing constructive dialogue with our shareholders as we pursue our strategy."
Hirai is due to give an update on his Sony strategy at a briefing in Tokyo on May 22.
JAPAN CHALLENGE
Loeb, a 51-year-old Californian, is one of the best known figures in the secretive $2.25 trillion hedge fund industry and an activist investor with a record of clashing with corporate executives over strategy. Forbes estimated his wealth at $1.5 billion in March.
After taking a stake in Yahoo Inc, he agitated successfully to oust the CEO and members of the Internet company's board last year after charging that directors were living in "an illogical Alice-in-Wonderland world."
But activist investors have had little success in Japan, where corporate boards are typically packed with insiders, and creditor banks tend to side with management in maintaining the status quo.
And what Loeb is proposing is hardly new. Investors have for years been calling for a break-up of Sony to unlock the value of its profitable parts, whose performance is masked by the struggling electronics arm.
Rather than a traditional IPO, Loeb has proposed selling a 15-20 percent stake in Sony Entertainment through a rights offering to existing Sony shareholders. The move would allow the parent company to shift some debt off of its balance sheet, the hedge fund CEO said.
Taking the unit public would provide incentives for its executives to run the operations more efficiently. Raising its profit margins to the industry average could in theory add another 625 billion yen in market value, Loeb said.
Most importantly, the cash generated could be used to help streamline the electronics business, which suffers from a lack of focus even after Hirai took the helm from former CEO Howard Stringer in 2012, Loeb said.
Stringer cut thousands of jobs and made efforts to narrow the company's focus. But ultimately he failed to revive Sony's creative edge and the company ceded ground to Apple Inc and South Korea's Samsung Electronics Co.
The flagship Third Point Offshore Fund posted a return of 10.5 percent for investors in January-April, a time when the rest of the hedge fund industry lagged with an average return of just under 5 percent. The fund was helped by its positions in Yahoo, a bet on Greek government bonds and its holdings of Japanese shares.
(Reporting by Nathan Layne, Emi Emoto, Tim Kelly and Chikafumi Hodo; Editing by Edwina Gibbs and Ian Geoghegan)
Source: http://news.yahoo.com/u-hedge-fund-calls-sony-entertainment-spin-off-075804356.html
denver nuggets new jersey devils torn acl derrick rose injury st louis news correspondents dinner i am legend
কোন মন্তব্য নেই:
একটি মন্তব্য পোস্ট করুন