Sony Corp is working with Morgan Stanley and Citigroup Inc as it considers adopting billionaire Daniel Loeb’s proposal for an initial public offering (IPO) of its entertainment unit, people familiar with the matter said.
Third Point LLC’s Loeb, which acquired more than 6 percent of Sony, is pushing chief executive officer Kazuo Hirai to sell as much as 20 percent of the entertainment assets in an IPO.
Sony shares rose as much as 7 percent on Thursday in New York and as much as 5.8 percent yesterday in Tokyo, where they closed 2.1 percent higher at ￥2,049.
Sony will look closely at Loeb’s proposal, though it is premature to speculate on the board’s decision, Hirai said at a conference on Thursday in Rancho Palos Verdes, California.
An entertainment IPO would help Tokyo-based Sony sharpen the focus on its unprofitable electronics businesses, boost its stock price and raise cash, Loeb said in a May 14 letter to Hirai.
“The formal answer requires a third party, the finance professionals’ opinion,” said Hideki Yasuda, an analyst at Ace Securities Co in Tokyo.
“Sony can’t give a big shareholder an answer that hasn’t been properly considered,” he added.
Shiro Kambe, a Tokyo-based spokesman for Sony, declined to comment, as did representatives for Morgan Stanley and Citigroup.
Film and financial-services earnings have helped Sony counter nine straight annual losses from making TVs.
The company’s movie studio topped the US box office last year with hits such as Skyfall.
Even after recent 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 Co and also lagging behind Apple Inc in smartphones and tablet computers.
“It’s something that needs to be discussed at the board level and discussed thoroughly,” Hirai said at the D: All Things Digital conference.
The electronics business is improving, Hirai said, citing the Xperia Z smartphone 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.
“If you look at the value of the entertainment properties for Sony, it’s been a great contributor to the bottom line,” Hirai 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,” he added.