August 12, 2022
Toshiba will split business into three parts amid crisis, offer buyout: Report

Toshiba plans to split into three companies in early 2023, a report said on Tuesday, after several woes at the firm, including the removal of the chairman of the board and a controversial buyout proposal.

Nikkei Business Daily said the three units would focus on infrastructure, equipment and semiconductor memory and are expected to be listed within two years, possibly.

Toshiba told AFP it was considering an option to divest its business, but said nothing had been decided yet.

Nikkei, which did not cite sources, said the move could be announced on Friday when Toshiba reports earnings and unveils a new medium-term business plan.

Toshiba spokesman Tatsuro Oishi told AFP: “We are drafting a mid-term business plan to increase our corporate value, and divestment of our businesses is an option, but nothing is officially decided at this point.” has not been done.”

“If we decide anything that needs to be disclosed, we will announce swiftly,” he said.

If the decision is ratified, it would end a period of enormous upheaval for the firm, which was once a symbol of Japan’s advanced technology and economic prowess.

In June, shareholders voted to oust the chairman of the board after a series of scandals and losses, in a rare victory for investors active in Corporate Japan.

The move follows the damaging revelations of an independent investigation that concluded Toshiba attempted to prevent shareholders from exercising their offer and voting rights.

The report of the investigation detailed how the firm had intervened from Japan’s Ministry of Economy, Trade and Industry to help influence the board’s vote.

The revelations came after an unexpected buyout offer in April from a private equity fund linked to then-CEO Nobuki Kurumatani.

The proposal caused an uproar, with allegations that it was intended to blunt the influence of active investors.

Other proposals surfaced later, and Kurumtani resigned in April, though he insisted it was not related to the purchase dispute.

The decision to divest Toshiba’s business is “the result of listening to active shareholders,” said Hideki Yasuda, an analyst at Ace Research Institute.

Proponents would view the move as maximizing the combined market value of Toshiba’s operations.

But he cautioned that there could be downsides.

“While market value can be maximized … you cannot cover losses in one business with profits in other businesses,” making Toshiba’s isolated areas of operations potentially more vulnerable, he said. .

Nikkei noted that splitting up the conglomerate has been a successful strategy for some firms in the United States, including Hewlett-Packard.

But for others, such as chemical giant DuPont, which split into three firms under shareholder pressure, the total market capitalization is now lower, the daily reported.

Nikkei said the move is relatively rare in Japan, and Toshiba will be the first major conglomerate to split into fully independent listed companies.

Yasuda said Toshiba faces unique pressure from its shareholders, putting it in a different position to other major Japanese companies.

But, he added, “if (Partition) proves to be successful, others will follow suit”.

Shares of Toshiba rose more than two percent in early Tokyo trade but ended the morning in negative territory.

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