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Sony chairman and CEO Howard Stringer on Monday got an endorsement of his team’s turnaround strategy in the form of an investment from a firm owned by Dubai’s Sheikh Mohammed bin Rashid Al Maktoum. The move also is an expansion of the ties between the fast-emerging Gulf region and key media and entertainment companies.
Observers estimated the size of the stake that an arm of Dubai International Capital took at up to $1.5 billion, which would give the company a Sony stake of a few percentage points.
Sameer Al Ansari, executive chairman and CEO of Dubai International Capital, called Sony “a compelling investment case, consistent with our mandate of supporting premier global companies.”
He added: “Whilst the restructuring process at Sony is well advanced, the recent successful listing of Sony Financial Holdings is evidence of management’s ongoing strategy of focusing on capital efficiency and cash generation.”
He also lauded Sony’s “truly global brand,” its product design and its global reach. All these factors “will spur the business’ medium-term growth as it capitalizes on positive underlying trends and emerging technologies,” he said.
Sony officials declined comment on the investment beyond confirming it.
The Sony investment comes at a time when the Gulf region is fast becoming a growing focus for media and entertainment players and looking to expand its presence in the sector.
Time Warner’s Warner Bros. Entertainment recently unveiled a broad-based strategic alliance with Abu Dhabi, United Arab Emirates, which includes a $500 million feature film fund, a $500 million video game fund and plans to build out the emirate’s entertainment infrastructure (HR 9/27).
In another big development in the region, Viacom this month launched MTV Arabia (HR 11/6). And Canadian cartoon producer CCI Entertainment last month formed a strategic alliance with Dubai-based Blink Studios (HR 10/4).
The fourth edition of the by now well-established annual Dubai International Film Festival is set for next month.
The stake that DIC on Monday unveiled in Sony looks to be less than 5% as the investment vehicle didn’t disclose the size of its stake or the amount it paid for it, and it didn’t make a regulatory filing in Japan. Any move that gives a company a stake of 5% or more would require a formal disclosure filing though under Japanese rules.
Wire services reported during the summer that DIC was looking to buy stakes of up to $1.5 billion in one or two publicly traded Japanese companies. A $1 billion investment would be equivalent to about a 2% stake in Sony given its market capitalization.
In the U.S., Sony’s American depository shares closed up 1.9% at $50.01.
The Dubai fund called its Sony investment “substantial.”
A DIC spokesman said they company has been busy investing in the U.S. and Europe this year and is now focusing on opportunities in Asia.
“DIC chose Sony because it has a very strong management, and there is a lot of upside to the company,” he said. “It is into its third year of restructuring and is making advances with that … . It clearly has a lot of growth potential.”
The spokesman refused to be drawn on whether DIC might seek to increase its stake in Sony in the future, saying that the company was “very pleased with its acquisition.”
But he shrugged off fears that the company might seek to get a certain level of control over Sony, emphasizing that the deal was purely an investment decision. “DIC is a very management-friendly investor that supports management,” he said.
The company also holds stakes in such corporations as Merlin Entertainments Group — the operator of such visitor attractions as Madame Tussauds — financial services firm HSBC Holdings and EADS N.V.
Julian Ryall in Tokyo contributed to this report.
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