Sony Corporation has rejected a proposal from its shareholder Daniel Loeb to spin off part of its entertainment business.
According to Reuters on Tuesday, Sony CEO Kazuo Hirai said in a letter to Daniel Loeb released by the company, "Sony's board of directors has unanimously concluded that continuing to own 100 percent of our entertainment business is the best path forward and is integral to Sony's strategy."
The owner of Third Point, known for ousting Yahoo's former CEO Scott Thompson and poaching Marissa Mayer from Google to run the company, had called for the breakup of Sony in a bid to tighten its focus on the electronics division.
Loeb who owns 7 percent of Sony through shares and cash-settled swaps, said the entertainment division is poorly managed, and wanted to make it more transparent and accountable.
The Nikkei newspaper last week reported that Sony's board was expected to reject Loeb's proposals, with directors arguing Sony could compete better by maintaining ties with the entertainment arm of the business. During the company's quarterly earnings call last Thursday, Sony's CFO Masaru Kato said the company was still discussing Loeb's proposal and would make a decision after thorough consideration.
The board had since met and rejected the proposal in an unanimous vote, arguing its decades-old vision of wringing synergies from integrating its content and electronics division was intact and gaining importance, the company said.
In response, Third Point said it would continue talking with the Japanese electronics company over the rejected proposal. "Third Point looks forward to an ongoing dialogue with management and intends to explore further options to create value for Sony shareholders," the fund said in a statement to Reuters.
For its first quarter ending June 30, Sony made a net profit of 3.5 billion yen (US$35 million), reversing a loss of 24.6 billion yen (US$250 million) last year boosted by the weaker yen and smartphone sales.