IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

Sony advised to spin off entertainment division

Move could help Japanese firm reduce its debts.

Sony

Sony has been advised to spin off its entertainment division as it could help the firm increase its value by up to 60 per cent.

Third Point, a hedge fund in New York, claimed that floating the Sony Entertainment division which includes one of Hollywood's leading film studios and one of the world's biggest music labels, would help the Japanese firm reduce its debt.

Third Point, a $13 billion hedge fund founded by billionaire investor Daniel Loeb, said it would put up 150-200 billion yen ($1.5-$2 billion) to support a public offering for Sony Entertainment.

In a letter to Sony Chief Executive Kazuo Hirai, the hedge fund recommended Sony sell a 15-20 per cent stake by offering subscription rights to existing Sony shareholders.

"Our plan shifts that paradigm and we believe, if managed properly, it could result in as much as 60 per cent upside to Sony's share price," Third Point said in a statement.

An official at Sony said its entertainment businesses are important growth contributors and are not for sale.

Third Point said it is the largest owner of Sony, holding shares worth 115 billion yen ($1.13 billion). Sony currently has a market value of close to $18.5 billion.

Loeb is one of the most closely watched hedge fund managers in the $2.25 trillion industry. His fund is known for building a sizeable position in distressed Greek government bonds last year and investing heavily in Yahoo shares.

Third Point's flagship hedge fund gained 1.4 percent in April, pushing returns to 10.5 percent for the year, according to an investor note reviewed by Reuters.

Featured Resources

Meeting the future of education with confidence

How the switch to digital learning has created an opportunity to meet the needs of every student, always

Free Download

The Total Economic Impact™ of IBM Cloud Pak® for Watson AIOps with Instana

Cost savings and business benefits

Free Download

The business value of the transformative mainframe

Modernising on the mainframe

Free Download

Technology reimagined

Why PCaaS is perfect for modern schools

Free Download

Most Popular

How to boot Windows 11 in Safe Mode
Microsoft Windows

How to boot Windows 11 in Safe Mode

7 Jun 2022
Attracting and retaining talent through training
Sponsored

Attracting and retaining talent through training

13 Jun 2022
Swift exit: How the world cut off Russian banks
finance

Swift exit: How the world cut off Russian banks

24 Jun 2022