Third Point Lifts Sony Stake, Urges Spin Off

Monday, 17 Jun 2013 | 9:19 PM ET
David Paul Morris | Bloomberg | Getty Images

U.S.-based hedge fund Third Point on Tuesday said it has lifted its stake in Sony and urged the Japanese electronics giant to spin-off its entertainment business.

Sony appears to be regaining its competitive edge and as a sign of its increased confidence in the company, Third Point has raised its stake to 70 million shares valued at 136.5 billion yen ($1.4 billion), the hedge fund's CEO Daniel Loeb said in a letter that was seen by CNBC.

The billionaire investor reiterated his call to spin-off Sony's entertainment division and offer to sit on Sony's Board of Directors.

Third Point Pushes for Sony Spin-Off
CNBC's Tokyo bureau chief Kaori Enjoji reports on the latest development of U.S. hedge fund Third Point's interest in Japanese consumer electronics giant Sony.

"We remain convinced that the proposed transaction will strengthen the company as a whole. The newly-listed entity will thrive with a governance structure which focuses on increasing profitability, competitiveness and accountability," Loeb said in the letter to Sony CEO Kazuo Hirai.

(Read More: Is Sony 'Un-Japanese' Enough to Entertain Change?)

Sony shares jumped 3 percent in early Tokyo trade on the news, outperforming a 0.36 percent gain in the broader Nikkei stock index.

In the letter to Sony, Loeb said that while Third Point has not yet been asked to discuss its ideas with the Sony Board, it would like do so "promptly."

"We hope that after seriously considering the merits of our proposal, Sony's Board will share the enthusiasm that other shareholders have resoundingly expressed for it," he said in the letter. "We can think of no better opportunity for you and the Board to demonstrate real commitment to your declaration that "Sony Must Change," he said addressing Sony's CEO.

Third Point is one of Sony's biggest shareholders, with a stake of about 7 percent.

(Read More: Sony Board Will Review Loeb Spinoff Proposal: CEO)

Loeb took markets by surprise last month when he pressed the Japanese entertainment and electronics giant, famous for the Walkman and PlayStation, to spin off part of its entertainment arm and insurance division.

Sony has struggled to make headway in recent years, losing out to the likes of Apple and Samsung.

The hedge fund manager has also publically expressed his interest in Japan as a concerted bid by Japan's Prime Minister Shinzo Abe to put the world's third largest economy back on track after years of poor growth and deflation sparks international interest.

(Read More: Sony Gets a Corporate Reboot at E3 Gaming Show)

"Indeed, Sony has an opportunity to serve as a shining example of how structural reforms, the "Third Arrow" of Prime Minister Abe's economic plan, can be implemented successfully through constructive shareholder engagement," Loeb said in the letter.

Sony declined to comment on Third Point's letter and would review its content closely, Reuters reported.

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