Shareholder Third Point LLC asked Sony with a letter on May the 14th to sell 15-20% of the corporation’s entertainment business in order to redirect funds to improving the situation of the electronics business.
Today Sony responded with a letter, expressing an unanimous refusal from the Board of Directors, and outlining that the Board and management team strongly believe that continuing to own 100% of the Company’s entertainment businesses is fundamental to Sony’s success.
The reasons offered include the following:
Demand for content is increasing its value in a dynamic industry environment characterized by emerging distribution platforms and the proliferation of both powerful mobile devices and access to broadband. Sony believes its entertainment businesses will increasingly benefit from these trends, and the Company’s shareholders will benefit from owning all, rather than a part, of these valuable assets.
Full control of Sony’s entertainment businesses drives internal collaboration, facilitates synergies, and allows the Company to be more nimble. Sony believes that the opportunities for collaboration among Sony’s businesses are numerous and increasing, and a rights or public offering would create the need for otherwise unnecessary and burdensome arm’s length intercompany relationships as a result of minority shareholder rights, thereby limiting Sony’s control and strategic flexibility.
Sony believes it has adequate funds, and if they were to ever need more, they would raise them without selling assets fundamental to its growth strategy.
CEO Kazuo Hirai Commented:
We are encouraged by our progress as we continue to execute on our One Sony strategy. We have made many changes during my tenure as CEO, and we are confident that we are on the right path. 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. We are determined to pursue sustained growth in profitability and shareholder value, so that we can meet and exceed the expectations of all of our stakeholders.
Ultimately Hirai-san has the way already marked, and his “One Sony” strategy seems to be the key, even more so in sight of the launch of the PS4, that is rather strongly entwined with entertainment business, especially for providing movie and music services.
Therefore, Sony will remain whole.