Sony CEO Kazuo Hirai has said the company's entertainment division is off limits.
Hedge fund titan Dan Loeb first floated the idea last week, simultaneously announcing that he has amassed a stake of more than 6% in the electronics and entertainment firm.
Loeb's Third Point hedge fund is now one of Sony's largest shareholders, and the firm's position could be expanded further.
Loeb wants the Japanese group to separate Sony Entertainment, the movie studio and entertainment division that has supported earnings in recent years, from its ailing consumer electronics business through a partial spin-off.
A Sony ( spokeswoman said last week the entertainment business was not for sale -- a position the company restated Wednesday. )
"As President and CEO Kazuo Hirai has said repeatedly, the entertainment businesses are important contributors to Sony's growth and are not for sale," Sony said. "We look forward to continuing constructive dialogue with our shareholders as we pursue our strategy."
However, Chief Executive Kazuo Hirai would take "sufficient time" to review the proposal with the board, the spokeswoman added.
One report, published Wednesday in an English-language version of the Nikkei, said that Sony was leaning toward accepting the separation proposal.
Sony shares were up 8% in Tokyo trading, and have gained more than 100% so far this year. The company has forecast a 16% in rise in net profits for the current fiscal year.
Despite the strong run, Sony faces tough competition from companies like Samsung (, LG and ) Appl (Fortune 500)e in many of its core markets -- including television and smartphones. ,
Late last week, Fitch Ratings dubbed Sony's turnaround plan a "long haul."
Loeb has been vocal about his interest in Japan, telling investors that his firm is "extremely focused" on the country. At the annual SALT hedge fund conference earlier this month, Loeb said Japanese stocks were cheap despite recent strong gains, trading at 13 times earnings on average, compared to about 18 for U.S. stocks.
The interest in Sony is also a big endorsement of the anti-deflation efforts of Prime Minister Shinzo Abe.
Since taking office, Abe has pursued a combination of increased government spending and central bank stimulus. The strategy has boosted equities markets and weakened the yen.
"Sony stands at the crossroads of compelling corporate opportunity and massive Japanese economic reform," Loeb wrote in a letter to Sony. "Under Prime Minister Abe's leadership, Japan can regain its position as one of the world's preeminent economic powerhouses and manufacturing engines."
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