Sony shares surge after US hedge fund calls for change

Sony shares rocketed Wednesday after a US hedge fund called on the company to sell off part of its entertainment unit, in a rare bid by a foreign investor to penetrate Japan's staid corporate culture. The Tokyo-listed stock was up 11.56 percent to 2,094 yen by the morning break, hitting its highest levels since mid-2011 after they dropped below 1,000 yen last year for the first time since the era of the Walkman. Daniel Loeb, whose hedge fund company Third Point has been amassing a stake in Sony, proposed selling off as much as 20 percent of the Japanese giant's entertainment arm, which includes profitable movie and music divisions. Loeb -- known for his aggressive style in forcing change at targeted firms -- said he supported chief executive Kazuo Hirai's bid to shake up one of Japan Inc.'s best-known names. "Since taking the helm as chief executive officer (last year), your stated commitment to reinvigorating the company has given us hope that Sony is entering a new era," Loeb said in a letter to Hirai dated May 14. But "for Sony to change, Sony must focus". Loeb has called for Sony to float part of its media division, which includes one of Hollywood's biggest movie studios and a major music label with artists such as Alicia Keys and Taylor Swift, by distributing shares to those who already have holdings in the parent company. Hirai is set to outline Sony's plans going forward next week, but the firm has initially rebuffed Loeb, who says Third Point is now Sony's single-largest shareholder with a stake topping 6.0 percent. Sony would continue "constructive dialogue with our shareholders as we pursue our strategy", but added that the "entertainment businesses are important contributors to Sony's growth and are not for sale".