Japan's Sony Corp. rejected on Tuesday a proposal from activist shareholder Daniel Loeb to spin off a part of the electronics company's entertainment business.
Loeb's Third Point LLC hedge fund proposed in May that Sony sell as much as a fifth of its money-making entertainment arm – movies, TV and music – to free up cash to revive the electronics business.
"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 company said in a letter to Third Point.
Loeb, who owns around 7 percent of Sony through shares and cash-settled swaps, has called the entertainment division poorly managed.
Sony's board was expected to reject Loeb's proposals, the Nikkei newspaper said last week, with directors arguing Sony could compete better by maintaining ties with the entertainment arm of the business.
Sony has long been a pillar of Japan Inc and a pioneer in the electronics industry. But it has lost market share - and its innovative edge - to aggressive foreign rivals such as South Korea's Samsung Electronics Co. Ltd. and Apple Inc. as they churn out blockbuster products.
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