Third Point Responds to Sony Rejection of Entertainment Spinoff Proposal

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Daniel Loeb

The hedge fund led by Daniel Loeb vows to explore further options to create shareholder value as Sony's stock drops 4.6 percent in Tokyo.

Daniel Loeb-led hedge fund Third Point late Monday responded to Sony Corp.'s decision to reject his proposal for a spinoff of its entertainment business.

In a statement, the activist investor's firm said it would "explore further options" to create shareholder value.

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But it also said it welcomed Sony's commitment to greater transparency after the entertainment and consumer electronics conglomerate said it would start disclosing more details about the performance of its entertainment units.

"Sony has clearly recognized the performance issues we identified," Bloomberg News quoted from the Third Point reaction. "A renewed focus on profitability and better margins should reduce bureaucracy and thus free up resources" that the conglomerate could use to invest in content.

Sony's stock in Tokyo trading closed down 4.6 percent, while the Nikkei stock index closed up 1 percent.

Third Point owns a stake of nearly 7 percent in Sony, making it one of the company's biggest investors.

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Sony's board had voted unanimously to reject the idea of an entertainment spinoff.

In a letter to Third Point, the company cited several reasons, such as the fact that content is becoming increasingly valuable as it is consumed more on more on digital devices.

"We are encouraged by our progress as we continue to execute on our One Sony strategy," president and CEO Kazuo Hirai had said earlier on Monday. "Sony's entertainment businesses are critical to our corporate strategy and will be important drivers of growth, and I am firmly committed to assuring their growth, to improving their profitability, and to aggressively leveraging their collaboration with our electronics and service businesses."