Sony Officially Rejects Call to Spin-off Image Sensor Business
"...On June 13, 2019, Third Point LLC (“Third Point”) issued a public letter to investors suggesting that Sony should consider spinning-off and publicly listing our semiconductor business, which would effectively separate Sony into an entertainment company and a semiconductor (technology) company. We appreciate Third Point’s strong interest in Sony and welcome the fact that many people have been reminded of the value and further growth opportunities of that business.
Sony’s Board and management team, along with external financial and legal advisors in Japan and the U.S., conducted an extensive analysis of Third Point’s recommendations. Following this review, Sony’s Board, which is comprised of a majority of independent outside directors with diverse experience in a variety of industries, unanimously concluded that retaining the semiconductor business (now called the Imaging & Sensing Solutions (“I&SS”) business) is the best strategy for enhancing Sony’s corporate value over the long term. This is based on the fact that the I&SS business is a crucial growth driver for Sony that is expected to create even more value going forward through its close collaboration with the other businesses and personnel within the Sony Group. The Board also reaffirmed that to maintain and further strengthen its own competitiveness, it would be best for the I&SS business to stay within the Sony Group.
In its letter, Third Point described our semiconductor business, which is centered on image sensors, as a “Japanese crown jewel and technology champion.” Sony’s Board and management team share this view and are excited about the immense potential the I&SS business brings Sony. We expect it to not only further expand its current global number one position in imaging applications, but also continue to grow in new and rapidly developing markets such as the Internet of Things (“IoT”) and autonomous driving. We also expect it will contribute to the creation of a safer and more reliable society through its innovative technology.
While Sony’s Board and management team do not agree with Third Point’s recommendation to spin-off and publicly list the I&SS business, we will continue to proactively evaluate Sony’s business portfolio, pursue asset optimization within each business, and supplement our public disclosures as we execute on our strategy to increase shareholder value over the long term.
...Our strategy for future growth of the I&SS business is to develop AI sensors which make our sensors more intelligent by embedding artificial intelligence (AI) into the sensors themselves. We envisage AI and sensing being used across a wide range of applications such as IoT, autonomous driving, games and advanced medicine, and believe there is a potential for image sensors to evolve from the hardware they are today, to a solutions and platforms business.
...Our analysis, which was carried out in collaboration with outside financial advisors, also identified multiple meaningful sources of dis-synergy if the I&SS business was to separate from Sony and operate as a publicly listed independent company. These dissynergies include increased patent licensing fees, reduced ability to attract talent, increased costs and management resources as a publicly listed company, and tax inefficiencies, in addition to the time required for making the public listing."