Sony Corp. on Sept. 17 rejected activist investor Third Point LLC's proposal to spin off its semiconductor unit.
The Tokyo-based manufacturer said in a letter to its shareholders that its board of directors' decision was unanimous. Sony will not spin off the business, also known as image and sensing solutions, or I&SS, because it plans to develop artificial intelligence sensors under the banner.
The company expects the business unit to drive growth and create further value through collaborations within the Sony Group.
"We envisage AI and sensing being used across a wide range of applications, such as IoT, autonomous driving, games and advanced medicine," the Japanese manufacturer wrote in the letter. Sony also sees the "potential for image sensors to evolve from the hardware they are today to a solutions and platforms business."
Third Point, led by CEO Daniel Loeb, urged Sony in June to spin off its semiconductor unit, rename it "Sony Technologies" and list it in Japan. It made the proposal because it believed that Sony's valuation does not reflect the quality of its businesses or the opportunity to generate long-term value.
The hedge fund also advised the Japanese company to spin off its games, music and film businesses. It pushed for the divestment of Sony's stakes in M3 Inc., Spotify Technology SA and Olympus Corp., and either return the proceeds to shareholders or use them for long-term growth.
In July, Third Point gave Sony a deadline of up to a year to respond to its proposal.
