Toshiba plans to split into 3 companies

Toshiba plans break up into three

Toshiba plans break up into three companies

Agency Report

Japanese industrial conglomerate Toshiba Corp outlined plans on Friday to break up into three independent companies.

This, it intends to do by spinning off two core businesses – its energy and infrastructure business as well as its device and storage business.

After spinning off the two companies, Toshiba will continue to own its 40.6% stake in memory chipmaker Kioxia as well as other assets.

The plan – borne of a five-month strategic review undertaken after a highly damaging corporate governance scandal – is partly aimed at encouraging activist shareholders to exit, sources with knowledge of the matter have said.

A break-up would run counter to calls by some shareholders for scandal-ridden Toshiba to be taken private but its strategic review committee said that option had raised concerns internally about its impact on business and the retention of staff.

Private equity firms had also conveyed concerns about completing a deal due to possible conflict with Japan’s national security law and potential opposition from anti-trust regulators, it added.

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Chief Executive Satoshi Tsunakawa said Toshiba would have chosen the option to split regardless of the presence of activist shareholders and that Japan’s powerful trade ministry had not voiced any objections to the plan.

“The decision allows each business to significantly increase its focus and facilitate more agile decision-making and leaner cost structures,” the company said in a statement.

Toshiba’s announcement come just days after General Electric Co unveiled plans to split three ways – also marking the end of another pioneering conglomerate with more than 100 years of history.

Shares of Toshiba are down 1.3% since Nov. 8, when it first flagged it might be considering a split.

Its Frankfurt-listed shares fell 4% at the open on Friday and are down 5.8% since Nov 8.

Recovering from a slump due to the COVID-19 pandemic, Toshiba reported second-quarter operating profit roughly doubled to 30.4 billion yen.

Reported by Reuters

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