Sony CEO Kazuo Hirai has written an open letter rejecting billionaire investor Daniel Loeb's proposal that the company sell part of its entertainment business. Loeb, whose Third Point LLC owns about 7 percent of Sony, had pressed the Japanese giant to offer between 15 and 20 percent of Sony Entertainment to shareholders; the investor believed this could boost stock price by up to 60 percent.

"Continuing to own 100% of our entertainment business is fundamental to Sony's success."

In a letter today, however, Hirai says that he and Sony's board "strongly believe that continuing to own 100% of our entertainment business is fundamental to Sony's success and that neither a subscription rights offering nor a public
offering is consistent with our strategy for many reasons."

Hirai says that the entertainment business is well poised to benefit from trends such as new distribution platforms at home and on mobile devices, and as such Sony would be better off owning it in full; this may also enable synergy between the electronics and entertainment divisions, something the company has struggled with in the past. Hirai also argues that, if necessary, Sony would be able to raise equivalent capital to the $2 billion Loeb proposed.

Hirai did acquiesce to one of Loeb's requests, saying that Sony would start to provide more financial disclosure about the entertainment business in its quarterly earnings results to assist investors.

Update: Third Point has responded to Sony's rejection, and apparently Daniel Loeb thinks it's not over yet. In a statement obtained by Reuters, the fund said "Third Point looks forward to an ongoing dialogue with management and intends to explore further options to create value for Sony shareholders."