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Sony Entertainment Spinoff Sought by Hedge Fund Shareholder

Third Point offers $2 billion to back IPO

Hedge fund manager Daniel Loeb is calling on Sony Corp. to sell its entertainment division in an effort to boost the stock price of the struggling Japanese electronics giant.

Loeb, an American investor who leads hedge fund Third Point, penned a letter (read here)  to Sony CEO Kazuo Hirai urging he break up the company, as first reported in The New York Times. “While Third Point supports your agenda for change, we also believe that to succeed, Sony must focus,” he wrote, in addition to meeting with senior Sony officials in Tokyo over the weekend.

He also suggested interest in spending as much as $2 billion to back an IPO of the entertainment division, which includes studio Sony Pictures and music label Sony Music, via returning as much as 15-20% of the unit to shareholders. Third Point itself owns as much as 6.5% of the company.

A rep for Sony denied the company is for sale, an assertion that has come from the company in recent months as it struggles to contain costs and reverse a decade-long slide. Earlier this year, an analyst suggested Sony’s entertainment division would be a good merger target for CBS Corp.

Shares of Sony were up 4.4% in pre-market trading early Tuesday.

Loeb has a history of agitating for change at huge companies to improve their fortunes; he led the effort to oust a previous management regime at Yahoo and lured current CEO Marissa Mayer to lead a turnaround at the company.

Disclosure: Third Point backed the acquisition of Variety by Penske Media Corporation last year.

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