Billionaire Investor Dan Loeb Wants Sony Corporation (SNE) To Spin Off Entertainment Division

Posted May 14, 2013

Dan Loeb
is a Wall Street hedge fund manager that is asking for Sony Corporation (NYSE:SNE) to shift their strategy around their Entertainment division.  Loeb’s Third Point fund owns around 6.5% of Sony Corporation and 60% of Sony Financial.  Loeb said that he wants to see Sony Entertainment spun out as a separate company.  Sony Entertainment controls the company’s music and movie business.

Loeb sent a letter to Sony CEO Kazuo Hirai saying:

“Leading Japanese equity research analysts at firms including Bank of America Merrill Lynch, Daiwa, Macquarie and CLSA all agree on Sony’s exceptional upside potential if the Company succeeds in its structural reforms, targeting an average price increase of ~25% for the shares. Unfortunately, the financial analyst community that follows Sony focuses almost exclusively on the opportunities and challenges Sony faces in its Electronics businesses, ignoring the value of Sony Entertainment.”

Dan Loeb is known for having a crucial role in restructuring Yahoo!  Last year, Dan Loeb discovered that former Yahoo! CEO Scott Thompson did not actually have a computer science degree and he helped hire Marissa Mayer from Google.

Loeb believes that market pressure from a 15-20% sale would make the company leaner.  He also believes that a partial spinoff would give Sony shares a 60% increase in value.  “While Third Point supports your agenda for change, we also believe that to succeed, Sony must focus,” said Loeb in his letter.

Sony has replied to Loeb’s letter saying that their entertainment businesses are important to their growth strategy and is “not for sale.”