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Dan Loeb Goes Activist On Sony: Demands Partial Spin Out Of Sony Entertainment, Sees 60% Stock Upsde

Tyler Durden's picture




 

Can Sony repeat the magic of the Walkman, the Playstation and the Trinitron? Maybe, maybe not not, and judging by the stock price, soaring recently due to the plunge in the Yen which to many implies a ramp in future profitability (the jury is still out on that), it may not have to. However, activist investor Dan Loeb is not waiting.

In a letter filed overnight, Third Point announced it has accumulated 64 million shares in the one time electronics and entertainment giant, making it the largest single shareholder of Sony. As a result, Loeb has a suggestion which is to partially (15-20%) spin off Sony Entertainment, in which Third Point would backstop a $1.5-$2 billion rights offering, with the resulting liquidity could go to boost Sony Electronics, as well as push off debt into the newly-created entity, reducing leverage at the parent company. Following this, the company could focus on restructuring Sony Eletronics, where Loeb believes there is untapped value, which could be as large as ¥725/share when factoring in for EURJPY moves. End result, Loeb sees 60% upside in Sony stock. We wish him the best of luck: other firms, such as Warren Lichtenstein's Steel Partners attempts to go activist in Japan in the past decade have largely crashed and burned. Perhaps for Loeb, the time of Abenomics will be different.

Full letter below

 

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Tue, 05/14/2013 - 07:20 | 3559604 nicoacademia
nicoacademia's picture

even without dan. the debasement of the yen will guarantee amazing stock returns. sort of.

Tue, 05/14/2013 - 07:30 | 3559614 GetZeeGold
GetZeeGold's picture

 

 

Oh no.....there goes Tokyo!!!

Tue, 05/14/2013 - 08:00 | 3559663 Muppet Pimp
Muppet Pimp's picture

Enjoyed reading Dan's letter.  I am strongly rooting for a Sony revival, their products have always had a special quality about them that perhaps only Samsung has really come close to matching in terms of exceptionally high quality, clean design & innovative features.  Supposedly T-Mobile is preparing launch the Xperia Z phone later this year. 

Tue, 05/14/2013 - 11:07 | 3560543 philipat
philipat's picture

Sounds like Olympus all over. Don't hold your breath. Japanese Corporate holdings and cross-holdings won't fold to foreigners.

Tue, 05/14/2013 - 07:24 | 3559610 n.d.v.
n.d.v.'s picture

A japanese board actually doing something to increase shareholder value? That would be a new one...

Tue, 05/14/2013 - 07:37 | 3559620 Fuh Querada
Fuh Querada's picture

Nice one! Like Olympus, another pillar of Japanese technology and customer satisfaction, a model of corporate governance.

http://en.wikipedia.org/wiki/Olympus_scandal

Tue, 05/14/2013 - 07:29 | 3559611 prains
prains's picture

sony for dummies version:

create a third tier sony knock-off company and saddle it with a bunch of old sony debt so the parent company looks like a shiny new nickle and sell both versions to a bunch of SUCKA's.

thanks but no thanks

Tue, 05/14/2013 - 08:00 | 3559667 Dr Benway
Dr Benway's picture

You missed the part where the executives get stock options in this great proposal. The reason for Sony Entertainment's underperformance, and the underperformance of the broader Japanese economy, obviously is that executives get paid too little.

Tue, 05/14/2013 - 08:32 | 3559767 Fuh Querada
Fuh Querada's picture

Anything new on the Aussie stock scams (like regulatory action?)

Tue, 05/14/2013 - 18:51 | 3562556 Dr Benway
Dr Benway's picture

It keeps getting more ridiculous. ASIC now refuses to regulate at all, instead stating its purpose is merely educational. The accounting fraud has just led to holes too big to acknowledge.

Tue, 05/14/2013 - 07:35 | 3559618 EvlTheCat
EvlTheCat's picture

Hey Tyler, you need to fire your room full of monkeys editing your articles.

Tue, 05/14/2013 - 07:44 | 3559630 GetZeeGold
GetZeeGold's picture

 

 

Dude, you'll get your cover charge back.....just don't make a scene.

Tue, 05/14/2013 - 07:53 | 3559642 francis_sawyer
francis_sawyer's picture

I guess it's a slow news day...

~~~

http://worldnews.nbcnews.com/_news/2013/05/13/18233295-insect-invasion-i...

or, anyone looking for a job?

http://openchannel.nbcnews.com/_news/2013/05/14/18238920-as-applications...

~~~

Plus ~ Angelina Jolie has been tested to have a cancer gene... ZOMG!

Tue, 05/14/2013 - 07:57 | 3559658 GetZeeGold
GetZeeGold's picture

 

 

Should be enough to wipe the Obama scandals off the map.....at least let's hope so.

 

Can't wait to see the new bionic Angelina.

Tue, 05/14/2013 - 08:05 | 3559668 francis_sawyer
francis_sawyer's picture

That's what I was thinking [take Obama scandals off front page]... Someone was hinting in the threads yesterday that they expected an imminent 'false flag', but when I read that this morning I was thinking some juciy gossip from Hollywood ought to do the trick...

~~~

& I think AJ already has bionic lips...

Oh... & there was another link that had Chewbacca at a college commencement ceremony or something & was expressing the need for "UNITY OF PURPOSE" to the grads... But I was too afraid to click on that one... I was afraid my head would explode like that dude in Scanners...

Tue, 05/14/2013 - 08:09 | 3559687 Bearwagon
Bearwagon's picture

Right, AJ's removed breasts are all the news today. What? Has there been anything about Obomber? Can't be true, the boobtube would have told me.

See how easy that was?    ;)

Tue, 05/14/2013 - 08:21 | 3559718 francis_sawyer
francis_sawyer's picture

Maybe someone can go find where Mel Gibson is hiding, drag him out, & beat the shit out of him some more...

Tue, 05/14/2013 - 07:54 | 3559656 orangegeek
orangegeek's picture

Sony was $150 a share in 2000. 

 

Before the November "QE Forever" run up to today, Sony was $10.

 

Sony is now $20 and there isn't a whole lot of new stuff coming down the pipe.

 

Seeking Alpha was doing a "buy now" job on Sony late last year - guess it worked - from $10 to $20.  But then again, most everything has taken off - S&P500 up close to 20% since Novermber.

Tue, 05/14/2013 - 08:25 | 3559742 asteroids
asteroids's picture

Sony, like Apple delude themselves in that they can sell their tech at grossly inflated profits forever. It don't work that way. Are you paying attention Apple?

Tue, 05/14/2013 - 10:01 | 3560213 old naughty
old naughty's picture

I would have thought the "hot" (implying short-term) products are all smoke gadgets.

It's the hot money at play in all these tech giants...

When they're pulled, no amount of ingenuity could change the downward spiral.

Dream on...

Tue, 05/14/2013 - 08:31 | 3559761 Downtoolong
Downtoolong's picture

Injecting the old cow with financial alchemy doesn't produce more or better milk. It just transfers more of the milk to the alchemist (drug dealer).

Tue, 05/14/2013 - 08:38 | 3559793 ToNYC
ToNYC's picture

 Positraction rules! says Appaloosa Dave

Tue, 05/14/2013 - 08:41 | 3559800 Edward Fiatski
Edward Fiatski's picture

¥725 - that's like fife dollas?

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