Sony Corporation (NYSE:SNE) (TYO:6758) could possibly be consulting Morgan Stanley (NYSE:MS) and Citigroup Inc (NYSE:C) to evaluate the plan proposed by billionaire Dan Loeb related to sale of the entertainment unit, says a report from Bloomberg, citing people familiar with the matter.
Earlier, the activist investor Loeb suggested the Japanese company to spin off the entertainment division. The move, according to Loeb, will boost the stock price and raise the much needed cash.
Sony Losing ground
Since May 13, a day before the reports of Loeb’s proposal was made public, the stocks of the electronics company have jumped 8.2 percent.
Despite the jump in share price, in the last couple of weeks Sony Corporation (NYSE:SNE) (TYO:6758) has lost almost two-thirds of its market value over the past five years owing to increased competition from Korean firm Samsung Electronics Co. and iPhone maker Apple Inc. (NASDAQ:AAPL).
Sony Film and Financial division Performing Well
However, among all the gloomy news, Japan’s largest television maker’s movie studio brought some cheers and topped the U.S. box office last year with hits such as “Skyfall.”
It is to be noted that earnings from the film and financial division has helped the company to counter the nine straight annual losses mainly from the electronics segment.
Letter from Loeb To Sony
Third Point LLC’s Loeb, in his letter dated May 14 letter to Sony Corporation (NYSE:SNE) (TYO:6758) Chief Executive Officer Kazuo Hirai, told that even a partial IPO of the entertainment group would help the company to focus more on the electronics unit. Loeb, which currently holds a stake of about $1.1 billion in Sony, assured the CEO in his letter that he is willing to bet more, if his proposal is accepted. He told he is willing to underwrite as much as $2 billion in the rights offering of the entertainment unit, if there is not much demand from elsewhere. The offering will also give shareholders a chance to participate.
Last week, the Japanese conglomerate, told that boards of directors have started the initial discussions on the proposal from activist hedge-fund investor Daniel Loeb.
“The proposal from Third Point, Dan Loeb is something that we should discuss thoroughly at a board meeting and then we’ll decide Sony’s stance,” Chief Executive Kazuo Hirai said earlier.
The spokesperson from Sony Corporation (NYSE:SNE) (TYO:6758) along with representatives for Morgan Stanley (NYSE:MS) and Citigroup Inc (NYSE:C) declined to comment on the matter.