Sony entertaining plan to sell assets

Morgan Stanley, Citigroup said to be evaluating IPO proposal for board

TOKYO - Sony Corp. is working with Morgan Stanley and Citigroup as it considers adopting billionaire Daniel Loeb’s proposal for an initial public offering of its entertainment unit, people familiar with the matter said Thursday.

Third Point’s Loeb is pushing Sony Chief Executive Officer Kazuo Hirai to sell as much as 20 percent of the entertainment assets, saying the move would help the company increase its stock price and raise cash. Sony’s U.S. shares rose 3.7 percent to $20.84 Thursday in New York, bringing their advance to 10 percent since May 13, the day before reports of Loeb’s efforts surfaced.

Sony will look closely at Loeb’s proposal, though it’s premature to speculate on the board’s decision, Hirai said.

“It’s something that needs to be discussed at the board level and discussed thoroughly,” Hirai said at a conference in Rancho Palos Verdes, Calif.

Even with the stock gains, Japan’s largest television maker has lost almost two thirds of its market value over the past five years, losing ground in TVs to Samsung Electronics and lagging behind Apple in smart phones and tablet computers. Sony’s movie studio topped the U.S. box office last year with hits such as Skyfall.

The electronics business is improving, Hirai said, citing the Xperia Z phone and saying the coming PlayStation 4 console will target frequent gamers before expanding into non-video game content and services.

“I want to revive the electronics company,” Hirai said at the conference.

Shiro Kambe, a Tokyo based spokesman for Sony, declined to comment, as did representatives for Morgan Stanley and Citigroup.

An IPO of part of the entertainment group would allow Sony to sharpen its focus on the electronics unit, Loeb said in a May 14 letter to Hirai. Film and financial services earnings have helped the Tokyo-based company counter nine straight annual losses from making TVs.

“If you look at the value of the entertainment properties for Sony, it’s been a great contributor to the bottom line,” Harai said in a CNBC interview. “We definitely want to make sure we can continue a successful business in the entertainment space. That is for me, first and foremost, the top priority.”

Loeb’s Sony stake was valued at about $1.1 billion, according to his letter. The 51-year-old investor said he would underwrite a rights offering in the entertainment unit that would give shareholders the opportunity to participate. Third Point, which manages more than $13 billion, would be willing to buy up as much as $2 billion of the offering if there isn’t demand elsewhere, according to the letter.

Sony’s American depositary receipts have advanced 86 percent this year. In Tokyo, the stock fell 2.9 percent to about $19.91 Thursday before the news.

Business, Pages 32 on 05/31/2013

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