Dan Loeb's Activism May Stall at Sony (Update 1)
NEW YORK ( TheStreet) -- Sony
Japanese companies have typically been resistant to change, particularly from outsiders, and previous attempts to target Sony have been unsuccessful.
In an emailed statement, Sony shot down the idea of a spin-out of its entertainment business. "Sony welcomes investment in the company. We are focused on creating shareholder value by executing on our plan to revitalize and grow the electronics business, while further strengthening the stable business foundations of the entertainment and financial service businesses," wrote a Sony spokesperson. "As President and CEO Kazuo Hirai has said repeatedly, the entertainment businesses are important contributors to Sony's growth and are not for sale. We look forward to continuing constructive dialogue with our shareholders as we pursue our strategy."
Loeb, who has fought battles in the past, including a high-profile tussle over Yahoo!
A spin-out of Sony Entertainment would provide Sony with liquidity to turn around its electronics business, which Loeb believes has tremendous value. Sony Entertainment has some valuable movie properties, including the rights to the James Bond movie franchise and the Spiderman series, a key Marvel property not owned by Walt Disney
Loeb wants Sony to streamline its business lines and focus on high-growth areas, such as the aforementioned medical devices, and Sony Image Sensor. He believes structural reforms in Sony Electronics could mean as much as 25% upside in shares, and if the Entertainment division is unlocked, shares could see as much as 60% upside from current levels.