Renowned electronic company Sony denied selling any entertainment wing to its major stakeholder Daniel S. Loeb, the activist hedge fund manager. The decision of Sony might prompt Mr. Loeb to go for a public fight. The company shooed any rumor that it desperately needs the capital of Mr. Loeb.
In May, he publicly announced that he now owns 7% of the company’s share, which, is enough to shake its very foundation. Sony is already in a bitter row with the Mr. Loeb. Whether he would put up a fight with the electronic giant is still to be ascertained. He remarked that, keeping in tune with the Japanese corporate culture, he has always tried to keep a friendly relation with the company, despite its disagreement. The meeting between the two on July 17 however showed signs of reconciliation.
Kazuo Hirai, Sony’s chief executive commented that it has seriously considered Loeb’s proposal of floating a part of company’s unit to the public markets. Further market analysis and suggestions from its advisors puts they company in a different light. Sony will do better if it is connected with its core and ultimate operations- the electronic section. It decided not to venture into the public market.
Daniel Loeb severely criticized the company policy of Sony. In a letter, he mentioned that Sony is adopting a wrong business policy. It is not correct to suppress the entertainment. It must not be devalued or kept in its underperformed condition, for that is not the approach for success.
The chief executive officer of Sony, Kazuo Hirai said that the company would soon reveal more information on its plans and programs. It would unveil particulars and details of its performance in the future. However, Loeb’s proposal of selling its entertainment arm was worth considering but advisors to Sony gave a different picture based on the history and background of partial spinoffs, remarked a reliable source. Many well-known companies have in the past listed subsidiaries on the market but in the long run it did not seem to be worthwhile. So, they were forced to buy back the operation later on.
A prominent example of this is the incident of Fox Entertainment. The mother company News Corporation listed Fox Entertainment in the public market in the year, 1998, only to make it private once again in the year 2005.
Sony has made an unusual move by adding George Clooney, the eminent Hollywood actor as its major defender. He accused the majority shareholder of having no idea and experience in movie business. Nevertheless, Loeb is satisfied the way things are turning out. He congratulates the company for taking certain transparent measures of going public with their information. The company could make its shareholders satisfied if it comes up with innovative and grand ideas to increase the profitability in the entertainment trade. Daniel Loeb’s firm Third Point is expecting words and discourse with the managerial body of the electronic company, Sony with the hope of creating better profit margin for its shareholders.